One of the many challenges your loved ones will face after you’ve passed is the question of who will inherit your property and how outstanding debts, taxes or other issues will be addressed. To avoid confusion and potential family conflict, many people choose to create a will or trust to dictate what happens in the event of their death. You may find, however, that it’s difficult to determine which avenue is appropriate for your estate.
Take a look at how each is defined:
A will is a document that goes into effect after death, and dictates the executor of your estate, who will distribute assets and settle debts as you wish. A will also dictates who will receive your property, who will become guardian(s) of your children, and how you’d like to address any outstanding debts or taxes. A will is easily drafted, but requires witnesses during signing to ensure its validity.
Most people should have a will in place to dictate basic actions after their passing, regardless of assets or estate size. It can be created at any time, but becomes especially important after events like marriage, the purchase of a home, or the start of a business. It is recommended to update your will at least every 5 years.
A trust goes into effect immediately after creation and is valid for your lifetime and after death. It entrusts management of assets to a designated successor trustee who will manage them after death and/or in the case that you are incapacitated. A trust is beneficial in that your loved ones can avoid the trouble, cost, and sometimes public scrutiny of putting a significant estate through probate. Due to the significant control granted, documents must be signed in the presence of a notary public.
A trust is something you may or may not choose to have in place. It can be created at any time, but you may consider it especially if you are diagnosed with a terminal condition or anticipate being incapacitated by progressive illness or a possible injury.
Consider the following:
- Setting up a trust can be costly and requires active management. While a trust can be set up for any size estate, you may want to carefully consider whether a living trust is in your best interest, as it is most beneficial to those with a sizeable amount of wealth to control.
- With a trust, all assets you wish to be managed by the trustee must be transferred into the trust; if you die or become incapacitated before all assets are transferred; only those assets that were already in the trust will pass to the trustee.
- If your assets are small, your estate may qualify for an expedited probate process. If you don’t have much wealth but are worried about your loved ones dealing with the court, consult your state’s probate laws to see if you would qualify.
If you are considering setting up a will or a trust in the Colorado Springs area, we would love to assist you in this process. The attorneys at Odle Law LLC have years of experience preparing these documents and would love help you! Contact us today to set up a time for your free consultation.