Living Will

Irrevocable Trust vs Will: What Are the Differences?

Irrevocable Trust vs Will

Every year in the US, approximately 2.8 million people die. While young people do die because of disease and accidents, the overwhelming majority of people who die are of retirement age or older.

Among other things, that gives them plenty of opportunities to decide how they want to handle their estate. For example, property owners must decide if they’ll give that real estate to family members, sell it off, or do something else entirely with it.

A will is the traditional means of handling these matters, but some people opt for irrevocable trusts. Wondering how the irrevocable trust vs will argument stacks up? Keep reading for a breakdown of what they are, how they differ, and their respective benefits.

What Is a Will?

In essence, a will is an estate planning document. You draw one up to establish what you want to see happen with your property and assets at the time of your death.

It’s a legal document, which means it must meet the requirements of the state in which you live. Wills also go through probate. It’s a legal process where the court validates the will, resolves debts, and sees to it that the remaining assets go to the designated recipients.

If there are problems with the will, the beneficiaries or the estate itself may need to hire a probate litigation attorney.

Benefits of a Will

One of the key benefits of a will is that it lets you get very specific about how you want your assets divvied up. For example, if you want to make sure one of your kids gets a piece of artwork, you can specifically give it to them.

Another key benefit is that you can alter your will if your circumstances change or relationships change. For example, you might update a will after a divorce or the death of a family member.

What Is an Irrevocable Trust?

An irrevocable trust is a kind of legal mechanism that lets you transfer assets from you to someone else. It’s also automatic in a way. While the beneficiary might not get the assets immediately, you give up complete control of those assets as soon as you create the trust.

Irrevocable Trust Benefits

One of the main benefits you get from irrevocable trusts is that it avoids the probate process entirely. It also means that you reduce the taxable value of your estate when writing a will.

Irrevocable Trust vs Will and You

The irrevocable trust vs will question might sounds like an either-or, but they aren’t the same. A will serves as a general estate planning tool that lets you address your entire estate and all beneficiaries. It leaves you in full control of your assets until you die.

An irrevocable trust functions best for getting specific assets into the hands of specific people at specific times. You essentially surrender that asset at the moment you create the trust.

Looking for more estate planning tips and options? Check out the posts over in our Living Will section.

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