Estate planning is an important part of successful aging. You can learn more about two estate planning tools—wills and trusts—in this article.
A will is a legal document adults of all ages typically need. They are especially important for seniors, who are more likely than younger adults to have accumulated significant assets. A will designates how an older adult wants those assets disbursed in the event of their death.
From family heirlooms to sentimental treasures, investments, property, and other assets, having a will in place can help settle an older adult’s estate in a timely and less stressful manner. Unfortunately, almost 70 percent of Americans don’t have a will. Some put it off because it is unpleasant to think about. Others think they are too young and healthy to worry about it yet.
Failing to create a will, however, means family members of the deceased must work with the probate court to divide up assets. While the family still needs to file a petition for a senior loved one’s will to be approved through the probate court, the process isn’t as burdensome.
When a person dies without a will, the family may face many challenges, including:
- Lack of timeliness: It can take more time to settle the senior’s estate, as the probate court system doesn’t usually move quickly. This can delay payment of estate-related bills, such as a mortgage or funeral expenses.
- Unexpressed wishes: Failing to create a will also means the senior doesn’t have a voice in how their assets are distributed. Due to this absence of direction, courts are often forced to find other ways to determine how to split up the estate.
- Family feuds: When there isn’t a will in place, it can increase the likelihood that family feuds over assets will occur. Sometimes these can lead to permanent rifts among family members.
- More taxes: Finally, the estate may pay more in taxes than it would have if a trust were established prior to the older adult’s death.
Benefits of Creating a Trust
A trust is an estate planning tool that allows assets to avoid the probate court. That can allow the estate to be settled in a timelier fashion.
A few additional benefits of establishing a trust include:
- Giving the older adult control in who benefits from their estate
- Ensuring loved ones with special needs are provided for
- Limiting creditors’ access to assets placed in the trust
- Reducing estate and gift tax burdens on loved ones
How Trusts Are Different from Wills
An elder law attorney can help determine if a will or trust is the best approach for managing an older adult’s assets. Some of the factors the attorney will likely encourage a senior to consider are:
- Costs: The costs associated with establishing and maintaining a trust can be significant. Assets with a title, for example, will need to be retitled with the name of the trust. For a small estate, these expenses might exceed the tax benefits. Make sure you understand the financial costs of a trust versus a will.
- Probate: The disbursement of assets in a will must be supervised by the probate court. That takes time and money. By contrast, the estate of a senior who has placed their assets in a trust likely won’t need to go through probate.
- Privacy: Court documents, such as a will, are public record. Anyone can view them online or with a quick trip to the courthouse. Older adults can protect their privacy and the privacy of those they intend to leave assets to by utilizing a trust.
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