There are many important differences between wills and trusts. While wills allow you to provide basic instructions about what should happen to your assets, trusts give you much more control over the assets. With a will, for example, you could simply specify that your son will inherit your money. If you create a trust, you can name your son as the beneficiary and name a trustee to manage the money. You could provide specific conditions for when your son is given the money and impose restrictions on how much money he is given at one time.
Trusts not only give you more control, but can also help you to protect assets, to plan for the management of your assets in case of incapacity, to address special situations like leaving money to a disabled child, and to allow assets to transfer outside of probate. It is important you understand all of the different things a trust can do that a will cannot do.
A spendthrift trust is a special kind of trust that is specifically created for heirs or beneficiaries who are not responsible with managing money. This kind of trust ensures that an inheritance is not wasted. A trustee can manage the money responsibly and use it to provide a benefit to those who are named as beneficiaries. Because the beneficiaries do not actually have access to the trust assets, the assets are also protected from creditors and cannot be lost if the beneficiary gets into debt or goes bankrupt.
A special needs trust, or a supplemental needs trust, is used to provide for a person who is disabled. There are restrictions about what the money can be used for, because if the disabled person is provided with cash or cash equivalents, this could result in a loss of eligibility for means-tested benefits like Supplemental Security Income (SSI) and Medicaid. The money cannot be used to pay rent, for example, as this would be considered the equivalent of providing cash.
Usually, the money is used to buy things that government benefits alone do not provide for the person who is disabled. For example, the money could be used to buy clothing, toys, electronics, or experiences like special trips. The goal is for the assets in the trust to be used to enhance quality of life of the person with the disability.
Many people who are creating a last will and testament or a trust will face a difficult decision regarding whether they want heirs or beneficiaries to be involved in the estate planning process and to be aware of the plans that are being made.
There are pros and cons to involving your heirs or beneficiaries in your plans. If you talk with them about your wishes, for example, you could reduce the chances that your will may be contested after you pass away. You can help your loved ones to understand why you are making the decisions that you are making about what to do with money and property.
On the other hand, the downsides could be significant. You could face pressure to create a plan that benefits particular heirs or beneficiaries and you could find yourself involved in a family fight and facing anger if your loved ones do not like the plans that you are making. It is your legacy and you deserve to do what you want with your money and property, so think carefully about whether to tell your family members your plans or not.
If you try to make a DIY will on your own without legal help, you miss out on the legal advice that you need to create the best estate plan possible. An experienced attorney can help you to understand whether you should create any trusts or use any other estate planning tools to better protect your assets and family. If you simply make a last will and testament without getting advice, you could be putting your assets at risk or could end up with a legacy that isn’t as strong as it should be.
An experienced attorney also helps to ensure that your will is legally valid and can give you advice on the ways to reduce the chances that someone will successfully contest your will after your death. Zimmer Law Firm has helped many clients to take the necessary steps to make a strong legacy plan and we can put our legal experience to work for you. Give us a call at 513.721.1513 to find out more about how we can help you.