Proper estate planning means knowing the benefits of various methods to pass your estate to your family. Wills and trusts are an important area of estate planning. You may think there is no real difference between them, but trusts do have important distinctions from wills.
Trusts are not just for the wealthy. Many people can set up a trust. U.S. News and World Report explains the features of a trust that wills do not include.
A court has to approve a will as a valid legal document. This makes your will part of the public record. However, a trust does not go through probate. As a result, you can conceal your estate wishes from the public by creating a trust.
Depending on the kind of trust you create, you can exempt your estate from certain taxes. Also, a trust can shield your assets if you become the target of litigation from creditors. For example, some doctors and people in real estate set up irrevocable trusts to protect their assets since their professions are at greater risk from lawsuits.
Greater distribution control
While you can place conditions on how to disperse your estate through your will, a trust provides you with more opportunities to control how your beneficiaries receive assets. You may even give your trustee discretion to distribute assets based upon conditions met by your beneficiaries.
Trusts have important benefits, though they are not for everyone. Some families may find them complex to set up. Still, a trust is an important estate planning tool that may work better in place of a will or even in concert with one.