What’s the difference between Wills and Trusts?

This week, we’re demystifying estate planning – the process that forces you to contemplate who’ll inherit your limited-edition, prized Beanie Baby collection.

While important to know where your things will end up, estate planning goes far beyond quirky possessions; it’s about safeguarding your legacy and ensuring your loved ones are taken care of.

Let’s get familiar with two big components of estate planning: Wills and trusts.

Wills, often considered the cornerstone of estate planning, provide a clear blueprint for the distribution of your assets. They ensure that your cherished possessions, financial accounts, and even guardianship for minor children are handled according to your wishes.

On the other hand, trusts offer an additional layer of control and flexibility. They can be designed to protect assets from taxation, manage wealth over generations, and even support charitable causes close to your heart.

Understanding how these tools work together can get you started in creating a comprehensive estate plan that reflects your values and goals:

Wills Wisdom:

1. Start Early: Don’t wait until you’re a billionaire with a mansion full of treasures to draft your will. No matter your age or wealth, having a will in place is a smart move. It ensures your wishes are known and your assets are distributed as you intend.

2. Be Specific: When crafting your will, don’t be vague. Clearly outline who gets what, and be as specific as possible. This reduces the chances of disputes and ensures that your beloved vintage vinyl collection goes to the right family member.

3. Regular Updates: Life changes, and so should your will. Major life events like marriage, divorce, or the birth of a new family member can impact your estate plan. Periodically revisit and update your will to keep it current.

Trust Tips:

1. Choose Wisely: Trusts come in various flavors, like revocable and irrevocable trusts. Each serves a unique purpose. Consult with your financial advisor to determine which trust type aligns with your goals.

2. Funding Matters: Creating a trust is just the beginning; you need to fund it. Transfer your assets into the trust to ensure they are protected and managed according to your wishes. Assets not funded into the trust may still go through probate.

3. Successor Trustees: In addition to having a trustee, selecting a successor trustee is crucial. This person will manage the trust if you become unable to do so. Make sure it’s someone you trust and who understands your values and intentions.

Estate planning can be complex, but these tips, along with the guidance of a financial advisor, should give you a solid start.

Always keep in mind, it’s never too soon to prepare for the future. Safeguarding your legacy ensures your loved ones are cared for and your desires are honored exactly as you intend.