If you haven’t done estate planning before, you might have heard about wills and trusts, but not what they are. Perhaps confusion over these estate planning documents has held you back from setting up your own plan. If so, here is a basic overview of what wills and trusts are, and the main differences between the two.
The will
Between the two, people in Sarasota are likely more familiar with wills. A will is a legal document in which the testator (the person who signed the will) describes how they want their assets distributed after they pass away. For example, you can choose to have your spouse inherit your entire estate, or divide it among your children. Virtually any person or charity that survives you can be an heir, so it’s up to you. You also use your will to name your personal representative. Commonly known as the executor, your personal representative will be responsible for guiding your estate through probate, paying off your remaining debts and distributing your assets to your heirs.
Florida law lays out strict guidelines for executing a will, or else it won’t be accepted by the probate judge someday. For example, you must sign it in front of two witnesses.
The trust
While you need a will at minimum to control your legacy, for many people, it is not enough. Bequeathing all your most valuable assets through a will alone can slow down the probate process and potentially leave your estate subject to the federal estate tax. A trust like a revocable living trust can help you keep assets out of probate and distribute them according to your terms. Once the trust is set up, you decide which assets go into the trust. You generally would serve as the first trustee, with a successor trustee taking over after your death. Then your named beneficiaries enjoy the benefit of those assets.
Everyone needs a will. Whether you need a trust too should be part of your initial conversation with your estate planning lawyer.