When planning for their family’s future, wills are an essential document to have. No matter who you are, what you do, or what you have, having a will provides some kind of direction and clarity for distributing what you have after you’ve passed. But once your will is in place, you might also consider whether it also makes sense to establish a trust, which can give you more options for your assets and privacy while you’re still alive.
AMG Wealth Advisors has helped Austin residents with their estate planning needs for decades, so we are ready to help guide you through this critical decision. Here’s some factors to consider when deciding how to best prepare for your family’s financial future.
While a will is a document that takes effect after you die, a trust is a legal arrangement where you transfer ownership of your assets to a trustee who manages them for the benefit of your chosen beneficiaries. A trust can kick in while you’re still alive, offering more control over how and when your assets are distributed. One of the biggest perks is that trusts typically bypass probate, saving time, money, and keeping your affairs private.
Here are some common situations where a trust is an ideal solution:
Trusts offer unparalleled flexibility and control, making them the go-to solution for these unique situations.
The first step in creating a trust is taking stock of what you own and what you want to protect. This is the same for wills and trusts alike, and while it may seem straightforward, this step can take more time and require more nuance than you may expect. This, of course, requires listing all of your assets—everything from real estate and investments to heirlooms and bank accounts.
Next, decide on the kind of trust that fits your situation, as there are two main types that differ substantially in structure or resulting benefits. The first kind is a revocable trust. A revocable trust offers flexibility, allowing you to make changes or even dissolve it during your lifetime.
The other type, an irrevocable trust, locks in your decisions, providing benefits like reduced estate taxes and asset protection. Beyond these two, there are also specialized trusts for charitable giving or tax savings—so choose wisely based on your goals, and consult a professional wealth advisor to learn more about the nuances as they pertain to your situation.
This is one of the most important decisions for the future of your trust, especially when planning beyond your lifetime. Your trustee will manage the trust, which requires a deal of responsibility with paperwork, managing distributions, and making tough decisions (if required). This person should be reliable, and being financially savvy and impartial are ideal characteristics. You can also opt for a professional trustee, like a financial institution, for added objectivity and expertise wherein you can direct them how to resolve types of disputes.
Work with an experienced estate planning attorney to draft a trust document that meets your goals and complies with state laws.
The final step to get your trust off the ground is to fund it with the assets you listed in step one. This means officially and legally transferring assets—like changing titles on property to place them into the trust. Make a habit of reviewing and updating the trust as life evolves, whether it’s a new property purchase, a growing family, or shifts in financial goals.
Deciding between a trust and a will can be tricky, but with the right guidance, you can make the best choice for your unique situation. Contact us at AMG Wealth Advisors to get started on securing your legacy with estate planning that works for you.
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