Estate planning is essential to protect your assets and the financial interests of your loved ones. It helps secure your legacy while also ensuring that your assets are distributed according to your wishes. Moreover, without an estate plan, your assets may be subject to intestacy laws that may not necessarily comply with your preferences.
Therefore, it’s important to not only have an estate plan in place but also ensure it’s as comprehensive as possible. Setting up a will and living trust can help you do that and more. It will help minimise taxes and ensure your assets are transferred to the beneficiaries of your choice. This will bring you peace of mind and give your beneficiaries clarity, thus avoiding potential disputes over your estate.
In this article, we’ll explore how the combination of a will and living trust can help you create a complete and professional estate plan.
1. Understanding a Will and Living Trust
A will and living trust are key components of a comprehensive estate plan. While both frameworks come with their own set of pros and cons and serve different functions, it’s important to understand their nuances to better implement them in your estate planning.
A will is the foundation of any good estate plan and helps in the allocation of your property and assets. However, a will is more than just a tool for asset distribution to your beneficiaries.
It can also help lay provisions for guardianship in case of minor beneficiaries, set up care funds for them or the elderly in the family, and arrange for donation funds to a charity of your choice, among other things.
Unlike a living trust, a will will come into effect only after you pass away. They’re relatively inexpensive to make and are easier to make changes to. However, wills are also public records. As a result, the details of your assets and provisions will no longer be private or confidential information.
A living trust, also simply known as a ‘trust,’ is a legal entity to which you transfer your assets to provide for and protect your beneficiaries’ share in those assets. Setting up a trust ensures greater legal protection for your beneficiaries while also reducing the potential liability of inheritance tax.
This reduces the hassle of unnecessary paperwork, saves taxes and grants you greater control over how and when your assets are distributed. In this case, you can either be the trustee yourself or appoint other trustees.
The best part is that a living trust can come into effect as soon as it’s created. However, it’s harder to make changes once set up and may involve complex legal processes to accommodate new changes. Although living trusts are more expensive to set up than a will, they ensure that your personal details and asset-related information are private and less likely to be subject to probate.
2. Elements of Comprehensive Estate Planning
A robust estate plan may require a combination of different legal frameworks and trust structures to maximise legal protection for your beneficiaries and manage tax implications effectively.
While a will and living trust are primarily the best legal frameworks to plan your estate, newer asset classes like digital assets and complex family arrangements might necessitate other legal options to manage your estate more effectively. Additionally, a special digital assets trust can also be created to manage your digital assets.
However, it’s important to choose the right type of trust based on the needs of your estate. For example, a trust might be a good option for a married couple that has joint ownership of a house, but a living trust and will may be more suitable for someone anticipating mental or physical incapacitation due to illness.
On the other hand, a lasting power of attorney (LPA) may also be helpful in certain types of estate plans. If you are looking for someone to depend on after an unforeseen event, a property and finance LPA can help lay out instructions for your attorney to manage your investments, pay bills, handle taxes or even buy/sell property.
Additionally, your estate plan can include provisions for your funeral arrangements. These can be added to your will or as a supplementary letter of wishes.
3. Executors and Trustees
Executors are appointed to manage the execution of wills. Their duties include registering the death of a testator and informing beneficiaries and relevant organisations, such as banks, life insurance companies, utility companies, etc.
They’re also expected to receive a grant of probate to take over the management of the estate, settle debts, and distribute assets as per the testator’s will.
On the other hand, a trustee is appointed to oversee and manage a trust. They are entrusted to act in the best interests of the beneficiaries and must not be partial to one beneficiary over another.
If a trust has more than one trustee, they’re expected to be transparent in their dealings and unanimous in their decisions regarding the trust. However, trustees are allowed to take professional advice regarding investments and management of the estate where needed.
4. Advantages of Combining a Will and Living Trust
An estate plan that combines a will and living trust is comprehensive and robust, offering a variety of advantages.
Trusts can be used to transfer assets of greater value, like properties or even digital assets like cryptocurrency. A will can supplement the trust by making provisions for the distribution of smaller assets and personal belongings. Having both a will and living trust in place reduces the likelihood of a lengthy probate process.
It is also recommended that a revocable living trust be made that can adapt to changes in intentions, beneficiary relationships, or trustees. Though the process for this is complex, it can lend greater flexibility.
In this way, a will and living trust can seamlessly manage an estate in the event of incapacitation without the need for court intervention. This approach also minimises other legal challenges or conflicts of interest that may arise from potential disputes among beneficiaries.
Choose Zenco to Set Up a Will and Living Trust Today!
Now that you know how to create a comprehensive estate plan, why not consider setting up a will and living trust?
Not only will these help protect the interests of your loved ones, but also ensure your assets are transferred to your beneficiaries, bypassing the need for probate or court intervention.
At Zenco Legal, we aim to make legal services accessible to everyone.
Whether you’re looking to write a will or set up a trust, our legal professionals can offer you the support and guidance you need. With our team of qualified and dedicated professionals, we help ensure that you remain in control of your future.
For more information on our services, check out our guides or book an appointment now.
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