In the realm of estate planning in Ohio, two instruments often come into play, which are wills and trusts. While both serve as tools to manage the distribution of assets after one’s passing, they differ significantly in their mechanisms and implications.
Learning about the differences can help you as you continue to craft your estate plan.
A last will and testament, commonly referred to as a will, is a legal document that outlines how beneficiaries get assets and properties upon your death. It is a straightforward and widely used method for individuals to express their wishes regarding their estate. A will allows you to appoint an executor who will carry out these instructions and only becomes effective upon the testator’s death.
Wills are particularly useful for straightforward estate plans, where the distribution of assets is relatively uncomplicated. They also enable you to name guardians for minor children, adding a layer of security for your dependents.
Of the estate plans Americans chose to make in 2021, trusts consisted of 18.78% of them. Contrary to wills, trusts are dynamic legal arrangements. A trust involves the transfer of assets to a trustee, who manages and administers them for the benefit of specified beneficiaries. This legal tool provides a level of flexibility that a will may lack, as it can address various scenarios, including incapacity and the distribution of assets over time.
One benefit of trusts lies in their ability to bypass probate, the legal process of validating a will. This means a faster and potentially more cost-effective distribution of assets. There are various types of trusts, such as revocable and irrevocable trusts, each serving different purposes based on your goals.
Choosing the right one
Deciding between a will and a trust depends on your specific circumstances and objectives. If your estate planning needs are relatively straightforward, a will might be sufficient. On the other hand, if you seek a more flexible and efficient means of managing your assets, a trust could be the preferred choice.
Making informed decisions about your estate can help you have peace of mind. Consulting with a legal professional can further clarify your options and ensure that your wishes are accurately documented according to your preferences.