Recently, many friends have been asking whether having a will is sufficient for post-life arrangements. They wonder why they should bother setting up a living trust, as it seems troublesome and expensive. However, here’s something important to note: if you pass away in the United States without a trust, your wallet could potentially suffer significant losses.
The Differences Between Wills and Trusts
- A will is not a contract. Although it designates beneficiaries, it still needs to go through probate. Probate is not only time-consuming and costly, but it also makes all your assets public, compromising your privacy. In contrast, a trust is a contract that designates beneficiaries and does not require probate. It saves time, effort, and money while preserving privacy.
- A will only takes effect after the testator’s passing. If the testator’s assets are simple, and the family situation is not complicated, a will can somewhat address the distribution of assets. However, in complex family situations or with additional conditions, a will has limited effectiveness and may even be insufficient. In contrast, a living trust allows the creator to make specific arrangements while still alive, ensuring that assets are distributed according to their wishes and avoiding disputes.
- While still alive, the creator of a trust can appoint a representative who will make financial and medical decisions on their behalf if they become incapacitated due to dementia or serious illness. A will cannot fulfill this role since it only takes effect after the testator’s passing.
- After the creator’s passing, a trust can protect the legitimate inheritance rights of their children. In certain situations, such as when a surviving spouse remarries, the assets may fall into the hands of the new spouse after the surviving spouse’s passing, jeopardizing the financial security of one’s own children. By specifying in a trust that the funds are intended to support the surviving spouse during their lifetime, the assets can be passed on to one’s own children after the surviving spouse’s death.
- A trust ensures optimization of estate distribution. If there are concerns about giving children access to funds too early, which may lead to wasteful spending, lawsuits, bankruptcy, divorce, or estrangement, a trust can be set up to allow children to receive only the interest before a certain age and gradually inherit the principal afterwards. Additionally, in cases where a child requires special care, if the assets left by the parents exceed the minimum income threshold for government welfare programs, the child may lose eligibility. A special needs trust specifically addresses this issue by providing funds within the allowable limits to ensure the child does not lose access to government benefits.
TransGlobal – Professional Trust and Estate Planning
Some people are interested in trusts but worry about the cost and finding a reputable institution. Make TransGlobal your first choice. TransGlobal provides comprehensive and reliable living trust services in all 50 states at an affordable price. The cost of setting up a trust is not significantly higher than that of a will, and it successfully resolves many issues. Therefore, we suggest that individuals with considerable assets (especially real estate) who wish to pre-plan their children’s future inheritance consider establishing a living trust, as it serves a necessary purpose.
