Both Wills and Trusts are used as an estate-planning document to transfer assets to the beneficiary when they die. Many people with a will do wonder if they need a trust.
Here are five ways in which a Trust is better than a Will
• You Can Avoid a Probate with a Trust While a Will Cannot do this
When someone passes away, you need probate to change the title on the asset. When an asset owner dies, and it is their name that's on the asset, without a named beneficiary, it might become inaccessible. If family members, however, want to access the deceased person's asset, they need to file a petition with a probate court.
When they do this, they need the directive from the court in the form of approval of the Will as well as the representative. This process is usually long, which prevents the payment of bills and management of assets. With a Trust, you get to avoid probate since the designated successor can easily access the assets.
• Beneficiaries Get Creditor Protection with a Trust
One of the fears of people is that inheritance left to their kids could be lost to the children's creditor. The creditors could be unpaid credit card bills, divorcing spouse, a lawsuit, or bankruptcy. Unfortunately, when you distribute assets using a Will, this is what happens.
With a Trust, on the other hand, the inheritance is protected from the creditor's reach since the asset will not be in the name of the inheritor. The Trust bears the ownership of the assets. The beneficiary can only access the assets based on what the owner specified.
• You get to protect benefits from the Government for Someone with Disabilities
If you have anybody with disability in the family – kid or grandkid, a Trust is not negotiable. Should you leave your asset to someone that gets government benefits through a Will, the beneficiary will be in a difficult position. It is either they lose the benefits, or they will have to transfer the inheritance to a Trust in which they have to make the beneficiary at the beneficiary's death
You can ensure that the benefits from the government keep getting to your kid by leaving such an asset in a Trust. With this, such inheritance will be available to take care of any expenses that the government benefits do not cover.
• Trusts can Reduce Estate Taxes while a Will Cannot
There are married couples that create I-love-you" Wills. This Will transfers all assets to the surviving spouse after any of them dies. With anyone having an estate of more than a million dollars, the assets you leave via I-love-you" Wills will not go to the spouse but the Commonwealth of Massachusetts. This will happen in the form of an estate tax that can only be paid when the surviving spouse dies. It is only a Trust that you can use to pass assets to your family, which will also reduce taxes.
• Minor Beneficiaries Can get Assets Without Court intervention with a Trust
When you leave assets to a small child, it triggers some problem because, according to the law, a minor cannot receive assets. The parents as well, cannot stand as legal representatives of the Child expect the court gives the go-ahead. Hence, if you leave money to your beneficiaries via a Will, there needs to be a Conservator that will be appointed by the court. It is the Conservator that will receive the inheritance on behalf of the Child.
The Conservator will have to report to the court every year. There will also be a guardian appointed to ensure that the Conservator is doing the assigned job. This translates to unexpected costs and delays in getting the funds even if needed. With this as well, the kid can access the funds on getting to 18 years of age. The disadvantage of this is that the kid can do whatever he or she likes with the money, shopping spree, latest cars, etc.
With a Trust, on the other hand, you can remove the court from the process and pass assets to a young beneficiary. You can also ensure that the person that you specify to manage the asset is capable. Besides, it also ensures that the asset is used strictly for what it is intended.
Conclusion
If you have a Will, without a doubt, you still need a Trust. Here are five ways that Trust supersedes a Will. It is the best in every situation.
