Many people who have recently started the estate planning process become overwhelmed by all of the options that are available to them. While they are aware that wills are the most traditional method of estate planning, they may have also been informed about the benefits of probate avoidance and how trusts can be used strategically to make better use of their estate.
If you are unsure about whether your estate plan would benefit from the initiation of a trust, you should first take the time to conduct thorough research. By understanding the potential benefits of trusts as an addition to an estate plan, you will be better equipped to decide whether to incorporate one.
What advantages do trusts have over wills?
Wills are practical and accessible for all. They can be done cheaply, quickly and easily. However, they are subject to probate at the end of a person’s life, and this is one of their biggest disadvantages. When assets go through probate, huge costs can arise, challenges can be made and aspects of the will can be challenged by those who have a stake in the inheritance. This can lead to complications and can reduce the number of assets that beneficiaries will receive.
The main advantage that trusts have over wills is that they can bypass the probate process completely. This is because you will have effectively transferred the assets before the end of your life to the trust. At the end of your life, or at a point determined in the terms of the will, the contents of the trust will be transferred to the beneficiary.
Trusts are also much more flexible than wills because there are many types and they can be customized according to your needs. For example, if you want to give a percentage of your estate to a grandchild but you are concerned about how they will handle the funds at a young age, you can choose to dictate the age at which they will receive some or all of the trust funds.
If you are embarking on the process of estate planning in New York but you are unsure of where to start, you should consider the legacy that you want to leave behind and how you want your assets to impact your loved ones.