When planning your estate, it is important to consider the distribution of your assets after your passing.
One decision to make is whether to use a trust or go through the probate process.
Efficiency in asset transfer
Probate, the legal process for validating a will and distributing assets, can be lengthy, and you can lose up to 8% of your assets in costs without thorough estate planning. However, a trust allows for the swift transfer of assets to your beneficiaries without court involvement.
Probate is a public process, which means that the details of your estate and its distribution become part of the public record. This lack of privacy can be a concern for individuals who value discretion in their financial matters. Conversely, trusts provide a confidential way to distribute assets because they do not become part of the public domain.
Reduction in costs
The legal fees, court costs and other expenses involved in probate can eat into the value of your estate. Trusts generally involve fewer expenses, so more of your assets get passed on to your intended beneficiaries.
Probate can be contentious. Family members or other interested parties may dispute the will, potentially leading to legal battles. These disputes can be emotionally and financially draining. However, with a trust, the trust document determines the distribution of assets, making them less susceptible to legal challenges.
Flexibility in asset distribution
Trusts offer more flexibility in asset distribution. You can specify various conditions for the release of assets to beneficiaries, such as reaching a certain age, achieving specific milestones or even for educational purposes. This added control allows you to tailor your estate plan to your unique family circumstances.
Understanding the benefits of a trust can help you make an informed choice when planning your estate.