When it comes to estate planning there are two major vehicles for the distribution of property: A will and a trust. Both are very useful tools and can accomplish specific goals—but how do you know which one is best for your family? Contrary to popular belief, the two are not adversarial concepts, and you don’t have to pick just one or the other. In many cases the two documents work in tandem, with one document supporting the other.
Which document you will need (or whether you’ll want to have both) depends on a number of factors, some of which may seem completely irrelevant at first: the size of your estate, your goals for that estate, the age of your children, your marital status, your retirement savings, and many, many more. Nontraditional families need to be especially aware of how each document can help them achieve their goals—or in some cases hold them back. In this post and my next I will go over each document, what it does, and why your family may need it.
What Is A Will?
A will is a formal declaration of your wishes. It is a document you create to declare the extent of your privately held property (it does not cover jointly owned property) and what your wishes are for the distribution of that property. You name an executor to carry out your wishes, and you can even include a nomination of guardian for young children in your will. A will does not go into effect until after you die; before then it is simply a piece of paper containing your private wishes (and as such can be amended at any time.) However, once you have passed away your will no longer remains private, it now becomes a matter of public record, available to anybody who would like to view it, and overseen by the court in a sometimes lengthy and expensive process called probate.
Do You Need a Will?
The easy answer to this question is: Yes—everyone needs a will. If you choose not to create a trust a will is the only way to let everyone know your wishes. Even if you do choose to create a trust for your family, you’ll want to create a “pour-over” will to go along with it. A pour-over will directs that all of your assets be transferred, or “poured-over” to the trust. The pour-over will adds a safety net to your estate planning, because any assets that were not included in the trust, for one reason or another, will be poured-over to it by virtue of the will.
My next several posts will dig further into what a will can do for a nontraditional family and, more importantly, what may happen if someone in a nontraditional family dies without a will.
Why do you need a will and a trust? In my next posts I’ll discuss more about what a will entails, and why it is crucial for non-traditional families to have them. In my final post in the series I will cover the subject of trusts: what a trust is, why your family might need one, and why non-traditional families in particular will want to consider a trust as an option for their family. I hope you’ll check back frequently to learn more!