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Understanding wills and trusts: part 2

Wills and trusts have their similarities, but many of their attributes make them distinctly different. For those creating their estate plans, it is important to select the best option for their particular situation.

The first article covered the differences between wills and trusts. To decide between the two, there are a few aspects that estate planners should consider.

Estate components and finances

Depending upon the value of assets, a will or trust may be better. In the case of people with large estates, trusts tend to be more beneficial, whereas smaller estates may be fine with a will. In fact, some small estates do not even require a probate. Sometimes, the probate process may take an extended period of time, especially if there are any contests. In such cases, time-sensitive assets, like businesses, may be negatively affected. Therefore, a living trust may be beneficial. Either way, it is a good idea for parties to be familiar with Virginia’s estate tax laws to see how they will affect the estate.

Beneficiaries

The type of beneficiaries who will receive the estate can be a strong determining factor of whether to choose a will or trust. In particular, when estate holders want beneficiaries to receive their inheritance at a specific time or over the span of their lives, a trust may be a better choice. Such instances may involve the following types of beneficiaries:

  • Minors
  • Pets
  • Adults or children with special needs

In cases where estate holders would just like the reward to be dispersed at a later date, a will may still suffice. Depending upon additional factors, either option could work.

Location

Different states have their own distinct estate and probate laws. Becoming familiar with the laws and understanding how they will affect the estate can be a strong determining factor in choosing to utilize a will or an estate.

These are a few of the main components that may assist in selecting a will and a trust. Take time to review all available options to decipher which choice best suits your needs.

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