Let’s start with the basics
If you use a Will to pass your estate to your survivors, you’ll likely have provisions in your will leaving your estate, or parts of it, to a spouse, children, or others, and perhaps you will even leave assets to a trust which provides that distributions will be made over time or at a certain age. You can leave an inheritance to someone “outright,” which means they get ownership of it when you pass away, they can do whatever they want with the inheritance, or you can create a “testamentary trust” in your last will and testament, which puts certain conditions on when the beneficiary may receive their inheritance. The testamentary trust provisions are included in your will and take effect upon your death.
Will Plan
With a Will Plan, you leave all your assets in your name: your home and any other real estate, your investments, and so forth. When you die, your assets are frozen (even though you had a Will), and your survivors must retain attorneys to go through the court-supervised probate process of transferring assets to the people who are named in your will.
Living Trust
A Living Trust is prepared so that after you pass away, your estate, or parts of it, will be transferred from your trust to whoever you designate (a spouse, your children, etc.), and your assets may remain in trust for specific beneficiaries. Therefore, when you establish your Living Trust, you should also transfer assets to your Trust, such as your home and other real estate, investments, and so forth. This will keep your estate out of probate, making it more straightforward for your beneficiaries to receive their inheritance and reduce the expense and delay of settling your estate.
What’s the bottom line?
Some people like the simplicity of the Will Plan even though it requires their survivors to go through the expensive and lengthy court and attorney-involved probate process. Others prefer establishing a Living Trust and transferring assets to the Trust to keep those assets from going through probate later. So it’s a matter of doing the work upfront or letting it happen later in a court proceeding. The main takeaway: decide to prepare your estate plan and take action. Failing to act puts the government in complete control of your estate.