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How are wills and trusts different?

On Behalf of | Jul 29, 2022 | Estate Planning

It’s common for people to start thinking about who they will give their assets to after they pass away. However, no one knows when they will pass away. That is one reason why it is important to have an estate plan even when people are younger.

There is more to an estate plan than simply drafting a basic will that states the beneficiaries they want to receive their property when they pass away. While wills are good options for many people, there are other options to consider. One of these options is drafting a revocable trust. It is important to understand the differences between the two documents so you can choose the best option for you and your loved ones.

Wills

A will states your wishes for the distribution of your property after you pass away. It allows you to give only to certain family members, to give in different percentages to different family members, to give to charities, or achieve many other goals. A will also allows you to name your personal representative and guardians for your minor children. Compared to a trust, a will is generally simpler and less expensive to draft. A will must go through the probate process.

Trusts

Trusts can be adapted to many situations and needs. In a so-called living trust, people can transfer their property to the trust while they are still alive. This means they technically no longer own the property. However, the property in the trust is held for their benefit until they pass away, at which time it is held for the people or organizations they have named as their successor beneficiaries. Since they did not own the property when they died, it is not considered part of their estate. This means the property can avoid probate.

Estate planning can be a complicated process in New York. It is important for people to choose the best options for their situation. Experienced attorneys understand the pros and cons of the different options and may be a useful resource.