Beyond the Will: Strategies for Wealth Preservation

When planning for the distribution of your assets, it's important to understand the differences between a Will and a Living Trust. While both serve to direct the transfer of assets, they operate in very different ways and offer distinct advantages. Understanding these differences is essential to ensuring your wishes are carried out, minimizing delays, and protecting your loved ones.

Below is a breakdown of each and the advantages of utilizing a Living Trust.

Wills:

• Estate must file a Probate Petition and an Executor must be appointed by the relevant Court, which can be a lengthy process. Before the Will takes effect, the Executor has authority to act.       
• Executor distributes assets according to the individual's instructions.
• If the individual has minor children, the Will should nominate a Guardian. However, the Court makes the final decision regarding Guardianship.

Living Trusts:

• Takes effect immediately during the Grantor A.K.A. Settlor’s lifetime.
• Living Trusts are revocable, allowing the Grantor to retain control over assets and management, with no obligations to future beneficiaries during the Grantor’s lifetime, or until incapacitated.
• Assets already titled in the Trust’s name are available and others can be transferred into the Trust after death by using a “Pour over Will.” This can then be passed to beneficiaries, or held further in the Trust, as directed by the Grantor.
• The Grantor typically serves as the initial Trustee, continuing to manage and use the assets as needed, without limitation or obligation to anyone.
• The Grantor retains the right to change beneficiaries, the distribution of assets, or any other aspect of the Trust.

Advantages of a Living Trust:

• Immediate Management: If the Grantor becomes incapacitated, the named successor Trustee can manage the assets, unlike a Will, which requires a Court-appointed Executor.
• Avoiding Probate: Unlike a Will, a Living Trust bypasses the probate process, saving time and costs. It also keeps personal finances private, as probate proceedings are public.
• Estate Tax Planning: Living Trusts make it easier to plan for estate taxes after death.
• Simpler Probate Process: If most of the Grantor's assets are in the Trust, the Estate may qualify for a simpler, less costly "Summary Probate" process.

Although a Living Trust offers numerous benefits, it's usually prudent to have a Will in place as well. A Living Trust only governs assets placed within it, and it's unlikely that each and every asset will be transferred. A Will ensures that your non-Trust assets are properly managed and distributed according to your wishes. It also allows you to nominate Guardians for any minor children. Be sure to engage with a qualified estate attorney who can help you navigate through this process based on your circumstances.

Both a Will and a Living Trust serve important roles in estate planning. While a Living Trust offers advantages such as avoiding probate and ensuring privacy, a Will is still necessary to address assets not included in the Trust and to appoint guardians for minor children. Combining both tools ensures that your wishes are fully carried out and your estate is managed efficiently.

Talk to an Oppenheimer Financial Professional today to see how you can incorporate a living Trust and Will into your estate planning strategy. You can find one in your area here.