Will verses Trust -- And Inheritance In General

INHERITANCE SHOULD BE THE CONSISTENT AND CAREFUL PASSING OF AN ESTATE, AND YOUR CHOICE OF A WILL OR A TRUST IS ESSENTIAL TO THE INHERITANCE PROCESS.

Inheritance is the general term used for giving what an individual, couple or family owns, to others after their passing away. Generally, the assets and items that are passed are called the estate. Defining and organizing an estate will happen eventually, at least as early as when inheritance is necessary, but a family may organize their estate, and even pass it on to others, before their passing away.

An estate plan is the generic term used to describe what is planned at inheritance. It would normally include a designated recipient for all assets, a designated time for when and how they are to pass, and a plan for how they are to be managed if not given away immediately. A consistent estate plan would have the outcome desired for all recipients, and for all assets of the estate, without missing or forgetting any persons or items.

Though professional help in inheritance is not always necessary, complications in an estate are best handled by those with experience and training. Complications in an estate or in inheritance might include the following:

• Special physical or financial needs for one family member as compared to others

• Assets that are not immediately liquid, such as real estate or a private businesses

• The potential for large taxes being paid, that might be avoided with planning

• Minor children or aging parents that are not able to take care of themselves

• No immediate family member or friend to assist with your affairs in your later years

Is it possible to cover everything perfectly at inheritance, with an estate plan? At Providence First, we have the ability to work with all aspects at the same time -- legal, tax, financial and investments, to make your estate plan and inheritance as consistent and careful as possible.

SHOULD YOU HAVE A WILL OR A TRUST? THE DECISION COMES DOWN TO GIVING IT AWAY IMMEDIATELY, VERSES TRUSTING SOMEONE TO HOLD IT BACK AND DISTRIBUTE IT OVER TIME.

A simple will must give all assets of inheritance away immediately, with no conditions attached. There may be alternatives as to who receives it and what is received, based on conditions at the time of passing, but nothing must be held back. This also means that you may not specify a specific use for any assets.

One exception it to have a will that creates a "life estate" for someone. This is almost exclusively done with respect to real estate. One example would be to give your personal residence to a grandchild, with a life estate for the child that is the parent of that grandchild. The life estate means that the child may live in it during their lifetime, and at their passing away, the grandchild becomes the free and clear owner.

In all other situations, if there is a desire to specify a use, or to hold an asset back and give it away only after a period of time, or to give it away gradually over a period of time, or to  allow its use over time, a will may not be used and a trust is necessary.

A trust is created when an asset is given to a trusted party, called the trustee, with instructions on how to give the asset away over time. The instructions to the trustee are usually in a trust agreement, written by the persons that originally owned the asset, called the trustors or grantors of the trust.

If you decide that a trust is the best way to handle your inheritance desires, then you will want to work with those that are experienced and trained in handling trusts.  At Providence First Trust Company, our sole business is to act as trustees of trusts for individuals and families. Having that as our only business gives us an expertise in the many issues and decisions that are faced by trustees and others that handle the inheritance and estate plans of individuals and families like yours.  

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