If a person doesn’t leave a will before they pass away in Sherman, Texas, the courts decide the fate of their assets. An effective estate plan prevents this from happening and helps ensure that assets transfer smoothly to heirs. Two tools that a person can use to protect their property are wills and family trusts.
Overview of trusts and wills
A trust is commonly created during the lifetime of the creator, or grantor, managed by a trustee. There are several types of trusts a grantor can create, but most are revocable or irrevocable. A revocable family trust allows the grantor to add or remove assets as they see fit while irrevocable trusts cannot be altered.
A will is a document that determines the division of assets as directed by the creator, known as the testator. This document may include the guardianship of minor children, the handling of property and debts, and the testator’s final arrangement wishes. Many testators name an executor to ensure that arrangements are carried out and debts get paid.
Pros and cons of wills vs. trusts
Wills and family trusts have different advantages and disadvantages, so the creator should consider each one. A major difference is that a trust becomes effective immediately, and a will isn’t active until the testator passes. A will must pass through probate, a legal process to finalize a will, which can take several months. However, wills commonly cost less than a trust to set up, and it still makes probate faster than without a will.
A trust passes the assets to the beneficiary immediately without having to go through probate. A trust is often more expensive, but it gives beneficiaries privacy, unlike a will that becomes public record. A trust provides for the grantor’s incapacitation, and trusts are seldom challenged in court.
Trusts and wills can be effective estate planning tools regardless of a person’s income. However, a will is still needed, especially for assets that don’t make it into a trust.