There are many estate planning terms that most people in the Kent area have heard of. Some of the more common terms are wills and trusts. Even though these are common terms, a person may not know what they mean.
First, there is a will. A will is a document that takes effect after a person dies. The will allows a person to name an executor for their estate and controls who receives assets after a person dies. These can include property, assets and financial accounts. Assets that have designated beneficiaries are not affected by a will. Even if a person has a will, their estate will need to go through probate. Probate will inventory all assets and distribute them according to the will.
A trust is a contract between the settlor and the trustee. The settlor is the one who creates the trust while the trustee is the person who agrees to hold property in trust for the benefit of the beneficiaries at a later date. Trustees distribute the property according to the trust. Assets that are typically held in a trust include real estate, rental property and investment accounts. When a person dies, a trust does not go through probate.
An attorney who specializes in estate planning can help their client sort through wills, trusts and other estate planning terms. They understand estate planning tools and can make recommendations based on their clients' needs. Estate planning is important for everyone, regardless of their financial circumstances, as estate planning encompasses a broad range of topics. These include asset protection, guardianships and health protection documents. Estate planning is not just for older adults, but those with kids and concerns about what would happen if they become incapacitated will also benefit.
Source: lakeconews.com, "Estate planning: The difference between a trust and a will", Dennis Fordham, Feb. 24, 2018