There are many estate planning tools out there. But simply put, a trust is an estate planning tool that allows you to plan in advance. A trust allows you to control your assets even after your death and may allow for certain tax advantages as well as privacy and the avoidance of probate.
There are many different types of trusts and each is used under specific circumstances. For example, a charitable trust is a unique tool used to establish your legacy with a charity while saving on your income taxes. Revocable and irrevocable trusts are another form that might help provide protection against creditors, Medicaid, and law suits. And finally, special needs trusts might help protect your special needs child or family member.
The main difference between a will and trust is that only a will passes through probate. However, through a trust, your assets will pass to your loved ones privately and does not involve the probate court. Through a will the probate court oversees the administration of the will and ensures the will is valid. The court will then also administer the property making sure it gets distributed the way you intended. One disadvantage of a will is that all information and transfers through a will are public, and are reported with the state.
If the court authenticates your will, it will pass through probate reaching your intended beneficiaries. If the will is not authenticated, your money might end up with the state, instead of your loved ones. Comparatively, courts do not need to oversee the distribution of a trust, which can sometimes save time and money.
Another benefit of having a trust is that a trust takes effect as soon as it is created. Comparatively, a will takes effect only after you die. Through probate, a will determines who will receive your property at your death and it appoints a legal representative to carry out your wishes. This person is called the Executor. In comparison, a trust may be used to distribute property before death, at death or afterwards. A will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust.
In sum, if you want to effectively save time, money, and headache for your loved ones then you might consider establishing a trust. A trust avoids the probate process and protects your assets against creditors and lawsuits. Most importantly, a trust ensures the right people inherit your estate, and that nothing is left with the State. Contact Cleveland, Ohio estate planning attorney Dan A. Baron for a free consultation. Contact our Cleveland, Ohio office today at 216-573-3723.