From time to time someone will tell us that they were talking to a neighbor (or a friend, or an in-law…) and were told the best way to estate plan is a … “Trust”. Someone else will tell us a similar story ending in, the best way to estate plan is a … “Will”. Another story might end in “transfer assets to the kids now”. So what is the best planning tool?
The short answer is … it depends. Estate planning is 100% dependent on the individual, family, financial situation, and the goals that one is trying to achieve. Goals in estate planning can range from simple gifting, asset protection, estate and other tax planning, providing for minors, and planning for Medicaid, special needs, or family conflicts.
What works as the best choice for one family may be a very poor choice for another family. There is no shortcut and no two estate plans are entirely alike.
There are some basics that apply in virtually all situations. First and foremost, have a basic Will – well drafted by an attorney and properly executed under an attorney’s supervision. A solid basic Will covers basic estate gifting, appoints and empowers an Executor. This speeds, simplifies, and reduces costs.
A Will can be developed to address particular financial and family concerns such as protecting assets for minors, for other beneficiaries, from beneficiaries, and to save taxes. This is done by placing provisions in the Will which detail who receives gifts, what gifts a beneficiary receives, and when they receive them. It often includes placing a Trust in a Will and appointing Trustees and Guardians. Wills are flexible and provisions can be changed.
Trusts can accomplish many of the same goals, but there are many fundamental differences between Wills and Trusts. For example, while Wills manage and control property only after death, Trusts can be used both after death and during one’s lifetime. Also, while Wills control all assets covered by a beneficiary designation, Trusts only control property actually transferred to the Trust. Trusts, are flexible but generally not as flexible as Wills.
In some cases Wills & Trusts are used together. In most cases the “transfer assets now” method creates many problems and is not advised. In all cases, a basic Will, and if needed custom planning, are worth their weight in gold.
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The content in this document is provided for informational purposes only, and should not be construed as legal advice or an offer to perform services on this subject matter. Contact Visci & Associates to schedule a consultation at our offices in New York and New Jersey.