The main goals of Texas estate planning are often establishing a legacy and protecting loved ones. People achieve those goals through the use of testamentary instruments. The two types of documents commonly used as primary estate planning instruments are wills and trusts.
Those thinking about their legacy or the protection of their loved ones may need to choose between these two powerful types of documents. What should people know about wills and trusts as they begin establishing their estate plans?
Wills provide posthumous support
One of the main differences between a will and a trust is that a trust takes effect immediately, whereas a will only has authority after someone dies. Also known as a last will and testament, a will provides a testator with a means of conveying their wishes to others.
They can select specific beneficiaries to inherit from their estates. They can also designate specific property that they want those beneficiaries to receive. A will also provides means for a testator to name a guardian for their minor children.
Wills typically provide for the direct distribution of assets to specific beneficiaries. They cease having any authority once the personal representative of an estate finishes distributing the estate’s resources.
Trusts can last for decades
Trusts can protect people while they are alive and after they die. They are a legal way of creating separate ownership for resources, including financial accounts, businesses and real property. People fund trusts with their assets and then structure the trust in a particular way.
They can create revocable living trusts or irrevocable trusts depending on their circumstances. Trusts remain in effect for as long as the trust still has assets. The person creating the trust may act as the initial trustee. They can name someone else to act as the successor trustee in the future.
Trusts generally do not include provisions for the guardianship of minor children. However, they can protect assets from creditor claims or from misuse by beneficiaries. They can also help people qualify for certain benefits and avoid collection activity later in life or after their passing.
It is possible to use both a will and a trust as part of a comprehensive estate plan. Choosing the right estate planning documents requires a careful review of personal circumstances and an understanding of what different documents do. Testators may need legal assistance when establishing an estate plan and creating documents that allow them to leave a specific legacy.