When making estate plans, few people think beyond having a will. However, there is more to estate planning, especially if you have specific wishes regarding how your estate should be dealt with after you are gone.
While having a will is a step in the right direction, it is not a silver bullet when planning for the uncertainties of the future regarding your estate and the beneficiaries. There may be some loose ends as discussed below.
A will cannot protect your assets
If you leave assets to your beneficiary through a will, the legal ownership of the assets transfers to them. Therefore, creditors can repossess such assets when the beneficiary defaults on a debt.
However, if the assets are in an irrevocable trust, they are safe from creditors since they legally belong to the trust. Your heirs are only considered beneficiaries of the trust.
A will alone can be costly to your estate
With a will, your estate will be subject to probate fees which can sum up to a tidy figure if your estate is sizable. In addition federal estate taxes may apply, depending on the size of your estate.
You could save a significant amount of money if you include a trust in your estate plans since any assets in the trust will not count as part of your estate when arriving at these taxes.
A will can work against beneficiaries with special needs
If you have a beneficiary with special needs, leaving them assets in their name may make them ineligible for government support programs. In such a case, you can set up a special needs trust for them. These kinds of trusts are tailored to provide for your beneficiary with special needs while making them eligible for government support.
It is important not to leave anything to chance when making your estate plans. You can do this by learning more about the available options and making the best decisions with your estate and beneficiaries in mind.