Estate planning is the process of arranging for the management of financial assets in life and at or after death. This planning process is designed to reduce impacts to the value of assets by minimizing estate, gift, and income taxes. There are many parts to estate planning, such as identifying current assets, anticipating future assets and their values, designating beneficiaries, and making arrangements for the disposal or distribution of those assets after death. Estate planning is complex and requires the assistance of an experienced estate planning professional.
Is a Will or Trust Best For Me?
Typically, wills and trusts are estate planning tools, with advantages to each. A will is a relatively simple legal document that spells out a person’s wishes, such as which surviving family members will receive assets upon the will creator’s death. Wills name an executor, or someone who will administer the distribution of financial assets to surviving family members.
A trust is another legal arrangement for directing the distribution of assets after the trust’s creator passes away. Trusts offer a high degree of control over the management of assets, both in life and after death. In simple terms, a person’s financial assets are entrusted to a third party known as the “trustee”, which can be a financial institution, a person, or a combination of both. This arrangement adds protection from estate and income taxes. There are many types of trusts, including revocable and irrevocable, living, and testamentary types.