Living Trust Versus Will

Which is Right for You? 

Brief history of trusts, wills, and estate planning 

Estate planning basics 

Before comparing wills versus trusts, consider your needs and review some estate planning basics. Even if your estate planning goals are simple, it's easy to become confused by the different ways you can achieve them. Here are a few questions to help you stay focused on your desired end-result. You may want to discuss them with your qualified estate attorney. 

~ If I'm incapacitated for whatever reason, will my financial affairs and medical treatment continue as normally as possible? 

~ Will my property pass to who I want when I want? Are there any special circumstances that I may want to control? 

~ Do I have the best plan in place to pass my estate to my heirs while I'm alive, or at my death, while minimizing costs, fees, and estate taxes? 

Probate: Good or bad? 

Probate is the formal legal process governed by each state's laws for the organized settlement of an estate. Many people believe probate is a dreaded experience that should be avoided at any cost. This shouldn't be the case. The probate process gives recognition to a will and appoints the executor. The executor then manages the settlement process and distributes any remaining assets to the intended beneficiaries, honoring the deceased person's last wishes. 

Last will and testament 

There are numerous strategies that may be employed to achieve your estate planning goals. A will is a common estate planning document. 

Other estate planning methods and documents 

~ Forms of ownership or operation of law 

~ Beneficiary designations and contracts 

~ Powers of attorney - POA 

~ Advanced health care directives 

Trusts 

1. The person(s) establishing the trust - grantors, or in our earlier example, the Roman solider. 

2. The person(s) or entity benefiting from the trust - beneficiaries, or in our example, the soldier's family. 

3. And the person or entity with the responsibility to manage the trust - trustee. Someone or some institution the Roman soldier trusted to carry out his wishes in his absence. 

When you might need a trust 

Trusts can be created during life or at death and can be revocable or irrevocable. Trusts are subject to individual state law and can help avoid probate - if that is a goal. Here are some situations where a trust may be appropriate:

~ Blended families 

~ Minor children 

~ Real estate holdings in more than one state 

~ Life insurance 

Other things to know about trusts 

Trusts are subject to income taxes just like people are. A common form of a trust is a "revocable living trust," or RLT, which could be used to own your investments. Generally, with this type of trust, you would report the taxable income or gains and losses similarly to your personal tax reporting.

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This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client relationship. 

For more information on this and other topics, please contact Kevin via any of the channels listed below:

📧 kevin@kmckernan.com  | 📞 718-317-5007