Saturday, October 22, 2016

Will Versus Trust Which One is Right For You

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An estate is property owned by you at the time of your death including: real estate, bank accounts, stocks, bonds, mutual funds, life insurance policies, and personal property such as cars, jewelry, and art.  Estate Planning ensures that your property and health care wishes are honored, and that loved ones are provided for after your death.  Estate planning can include wills, trusts, and health care directives.  

According to Retirement Made Simpler study, women and younger and lower-income adults were less likely than men to say they participate in a 401k plan offered by their employers.  Approximately 53% of adults feel that even if their 401k account has lost value, it is as important to continue contributing to it. 

Everyone whether you work or not should have a will and a trust. A trust helps to avoid estate taxes and cannot be contested which prevents conflict and arguments among relatives after your death.

A will is states how property, income and possessions should be distributed after death and identifies a person or persons who are authorized to manage the estate. A trust is a legal agreement that allows a trustee to hold assets (property and income) on behalf of a beneficiary. Trusts can be setup and distributed in many ways. There are benefits of having a will and benefits of having a trust. You cannot have a trust without a will but you can have a will without a trust.

Benefits of a Will:
  1. If no will court decides who gets your assets
  2. Living spouse and children get assets and if no children next to kin gets assets
  3. Identifies who will take care of children and who manages will
  4. Minimizes legal and court fees
  5. Laws vary by state
  6. No absolute right to estate
  7. Signed by 2-3 witnesses

Benefits of a Trust
  1. Maintains privacy
  2. Minimize gift and estate taxes
  3. Can’t have trust without a will
  4. Can put conditions on how your assets are distributed after you die
  5. Covers only specific assets (life insurance, property, etc.)
  6. Use if you have a net worth of $100,000 or more
  7. Use if you want to maximize estate tax exemptions


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