A will directs who will receive your property upon your death, and it appoints a legal representative (executor) to carry out your wishes. A will covers any property that’s in your name at the time you die that’s not held in a trust or is an asset that passes automatically to designated beneficiaries (e.g., inheriting under insurance, joint tenancy, or retirement plans), and it only takes effect after you die.
A trust is a legal document that takes title to assets to be held for the benefit of one or more people (beneficiaries). A trust can be used to distribute property before death, at death, or afterwards. In order for property to be included in a trust, it must be put in the name of the trust. A living trust is revocable, so you can change or end it at any time. Often the person setting up the trust (the grantor) will retain the right to income from the trust for the rest of their lives, while saving the trust principal for their family or other beneficiaries.
Why Use a Living Trust?
You have minor children or children with special needs.
Setting up a trust for your beneficiaries can be especially helpful if a beneficiary is a minor, has special needs or receives public assistance, can be easily influenced by others, or is incapable of managing money. In these cases, their inheritance could be held in trust for their lifetime and managed by a trustee of your choosing to meet the beneficiary’s needs and circumstances.
You want to avoid probate.
A will has to pass through probate. That means a court oversees the administration of the will and ensures the will is valid and the property gets distributed the way the creator wanted. Probate usually takes many months and costs the estate money. A trust passes outside of probate, so a court doesn’t need to oversee the process, which can save time and money.
You want gifts to remain private.
A will becomes part of the public record since it must go through probate, so everyone can find out what you left and to whom you left it. A trust can remain private, so the details of its contents are not available via public record.
You want to retain some control over gifted assets.
A gift made in a will becomes the property of the beneficiary once the transfer of ownership is done. With a trust, the trustee manages the trust’s assets and you (as the person who created the trust) can set the terms of the trust. For example, if you’re leaving money to your son perhaps you want to give him one-third of the money when he turns 25, one-third when he’s 30, and the remaining third when he’s 35. Also, if you leave money to your daughter and she is going through a divorce, she can choose to delay payment of the inheritance keeping the money in the trust so it’s protected from the divorce settlement.
You want to try to protect your assets from Massachusetts estate taxes
A living trust with estate tax provisions can protect your assets from Massachusetts estate taxes, depending on the total value of your estate.
We can help you decide how to use a will and/or a trust in your estate plan. Call us today at 617. 299-6976 or send an email to firstname.lastname@example.org to schedule a free consultation.