The one thought that many people feel when they’ve hit retirement is how best to prepare for the future and how to make your family’s future secure as well. There are several ways to go about your estate planning, including wills and trusts. The question that many Americans want answered: is a will or a trust best for retirees?
Essentially, a trust is a pool of assets (including investments, cash, property, etc.) held for the benefit of a third party – the beneficiary. A trustee is appointed to oversee management of the trust. If you create the trust during your lifetime, it is known as a living trust and you would initially fulfill the roles of trustee and beneficiary. When the trust is set up, you would establish how the trust would distribute assets after your death and name additional trustees. In order to fund the trust, you would re-title your assets to be owned by the trust. A will is a legal document that communicates how a person wants his or her estate to distribute assets after death.
Trusts are generally more complex and require more planning, but they also allow you to exert greater control over your assets and how they are distributed. For example, if you’d like to leave money to a minor, a trust can establish a specific timeline for when the money is released, or establish specific parameters under which the money can be spent (i.e. for school).
Wills are easy to change if you find yourself looking to change how your assets will be distributed. Wills are also simpler and easier for some to understand. However, with help from a trusted legal advisor, either option would be available to you.