Planning your estate is essential for protecting your wishes in the future and after you die, but you may not have started this process yet. According to a survey conducted by Caring.com, only 4 out of every 10 adults in the U.S. have created a living trust or a will.
A will and a living trust are two documents you should include in your estate. Although commonly confused, they serve two separate purposes for safeguarding your wishes and preserving the best interests of your family.
Your trust
Your trust remains effective throughout your lifetime. You can move key assets into your trust, like your home, and then name someone to act as a trustee. While you are alive, you manage the assets contained in your trust. If you ever become incapacitated, your trustee will step in and take care of your affairs. Your trustee can also take over without court approval and manage your assets immediately after you die.
If you fail to include a trust as part of your estate plan, your estate may undergo probate after you die. This court process establishes the authority of your will, allowing your executor to distribute your assets.
Your will
You will likely include larger assets, like real estate, in your trust, but for smaller, important items you want to give to a certain person, you include them in your will. For example, if you want to give your grandmother’s antique china to a grandchild after you die, you would outline this specification in your will.
If you have children under the age of 18, you also appoint a guardian for them in your will. This guardian steps in and takes care of your children if you die unexpectedly. If you die without having a legal guardian ready to take over, the court may determine who your children go to following your death.