Before we start, it must be highlighted that this blog entry is only relevant to common law countries (i.e. England, USA, Australia, New Zealand, etc.) and to countries which recognize the legal institution of trusts.
Planning for the day you are no longer here may not seem like the most interesting thing to do with your time, but it is essential if you wish to leave your loved ones your estate and assets once you pass away. Because the only certainty in life is death and taxes, you want to be sure that the least amount of tax possible is taken from your estate when passing on to your beneficiaries.
One of the most challenging components of designing an estate plan is to determine what financial implications around your plan might entail. You need your estate plan to account for funeral costs, make it easy to access your assets and plan for the time and expense of probate court, if necessary.
Determining whether your assets are best addressed by writing a Will or setting up a trust is one way to be clear about the costs your estate will incur upon your passing. Below, we discuss when you may want to select a trust over a Will.
The Advantages of a Trust Doesn’t a Will Do That Too?
The Advantages of a Trust
Unlike a Will, which requires some form of authentication for your heirs to have access to your inheritance, trusts are more flexible given that they can additionally provide a substantial amount of tax benefits for the settlor (you).
Doesn’t a Will Do That Too?
Yes and no. Everyone should have a Will, but not everyone needs a trust. A trust is more appropriate for assets stretched across real estate, retirement accounts and investment portfolios which need to be managed continuously even by an expert, after your passing away.
A trust is legally separate from your estate and is established to help you grow, protect and distribute your assets by holding them in a single financial instrument. A trust will be in effect the moment it is set up, thus during your lifetime, but only the trustee will make dispositions after your death.
Trusts can be complicated to create. Because their documents protect some of your most important assets, you want to make sure that they are done correctly. Do ensure you seek appropriate guidance to discuss the specifics of your situation.
Whether or not you decide to set up a trust, start with writing a Will and updating your Will regularly as the very first step, and it’s an important one. But more importantly, you should register your updated Will and store it in a safe place. liteWill lets you register your Will and store an electronic copy of your Will. Otherwise, all the good work that you have done becomes irrelevant if your person of confidence is not able to find your Will in a timely manner. ‘A Will that is not registered is like a Will that does not exist’.
This portion of the website is for information only. The statements and opinions are the expression of their author, not of liteWill, and have not been evaluated for accuracy, completeness or changes in the law. Information contained in this article is not a substitute for tax or legal advice.
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