Different Types Of Wills & Trusts And What They Do

Mar 21, 2023 | Estate Planning

Creating a will & trust typically isn’t anyone’s top priority, but you can reap several benefits, both now and later on in life, when you utilize these legal tools. 

If you have minor children, a will and trust can offer you peace of mind as it will ensure they wind up with a guardian of your choosing and will benefit from your assets. Otherwise, that decision can fall into the hands of the state of Utah. Even if you don’t have minor children, if you pass away or fall ill unexpectedly without a will and trust in place, you could put your loved ones in a tough position during an already difficult time, as they may feel uncertain or not know at all what your last wishes were. 

While making such big decisions about your assets can be overwhelming, it is important you clarify where you want them to end up! Many people aren’t aware that there are different kinds of wills and trusts they can choose from, or even what the true functions of wills and trusts are. Because tomorrow isn’t guaranteed for anyone, and because knowing more about wills and trusts can help you be more confident in your legal choices, here are a few things you should know about the various options available to you!

What Is A Will & What Are The Different Kinds?

A will is a legal document that states how you want your assets distributed in the event of your death. It allows you to name an executor, who can manage your estate, and allows you to select a guardian if you have minor children. 

There are several different types of wills to choose from, including, but not limited to: 

A simple will – A simple will, as described above, is a straightforward document that clearly outlines the way you want assets to be distributed. It is one of the most common types of wills, and it’s best suited for someone with an uncomplicated estate and family situation.

Pour-over will – A pour-over will is used in conjunction with a living trust. Any assets not transferred to the trust in your life will be transferred to the trust automatically following your death. 

Joint will – A joint will is one will, signed by two people (typically a married couple), and it ensures that any assets will be left to the surviving spouse. These wills also usually allow for distribution to other beneficiaries after both spouses pass away as long as that is asserted in the will. 

A mutual will – Mutual wills are usually made by married couples or partners and are mutually binding. This means that neither partner can make a change to the other’s will without their consent. 

A holographic will – A holographic will is written entirely in the testator’s handwriting. While it is not valid in all states, the state of Utah honors holographic wills if they meet certain requirements. 

And more!

What Is A Trust & What Are The Different Kinds?

A trust is an arrangement where a person transfers assets like property, money, retirement accounts, and others to a third party, also known as a trustee, to manage or distribute to beneficiaries. It can help minimize taxes and avoid Utah’s probate process. Unlike a will, a trust takes effect immediately upon its creation and can benefit you and your loved ones during your lifetime, not just when you pass away! 

There are several different types of trusts to choose from, including, but not limited to: 

A living trust – While a will alone is a necessary tool in providing maximum protection for your assets and family, it won’t prevent your estate from having to go through probate (an expensive and time-consuming court process). A living trust can! It’s also known as a revocable trust and is created to secure a person’s assets. It can provide flexibility and privacy, as a living trust isn’t typically a part of public record. It also can be revised and nullified at any point by the trustor, giving them full control of their assets. 

An irrevocable trust – Unlike a living (revocable) trust, an irrevocable trust cannot be altered once it has been created. It offers additional tax shelter benefits that a living/revocable trust does not.

Asset protection trust – An asset protection trust is designed to protect assets from creditors. These are usually best suited for those in high-risk operations, like doctors, business owners, and others who are frequently at risk of being sued. 

Special needs trust – A special needs trust is set up solely for the purpose of providing for a loved one with a disability. It also helps ensure that they’ll continue to receive government assistance after you’ve passed away or become incapacitated. 

Charitable lead trust – This is a type of irrevocable trust that distributes assets to designated charities for a set number of years. You as the donor can benefit from tax deductions when assets are donated!

And more!

Is One Better Than The Other? Do I Really Need Both?

There is no “best” type of will or trust. There is, however, what best fits your needs. Depending on the state of your financial affairs, and your family dynamics, you may find that you need a will, trust, or both (though most people should have a trust in order to bypass probate unless they own all of their assets jointly). It’s all based on your individual circumstances!

Avoid Mistakes And Save Yourself Time & Money

At Proven Law, we can help you decide what type of will and trust is right for you so you can have peace of mind that your wishes will be honored down the road. We can explain your legal options, address your concerns, answer your questions, and help you navigate the legal processes of creating a will and trust. We will handle the paperwork and ensure you understand how any tool we design for you works! Remember, tomorrow isn’t promised, so it’s best to plan today. Call Proven Law now to schedule a free 30-minute consultation. 

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