Trusts As A Means Of Estate Planning
Same as wills, testamentary trusts include the people who will receive your assets after you die, allowing you to freely manage them while you are alive.
Unlike wills, trusts require you to give up direct ownership of those assets, by transferring them in fiduciary property to another, who is obliged to exercise this duty for your benefit of whoever is designated as beneficiary in the same trust.
Trusts are often preferred over wills, since they avoid the probate proceeding required for your loved ones to receive your assets in the event of your passing. Probate trusts avoid probate lawsuits, which is usually part of their appeal. However, how would my loved ones acquire my assets after my demise if I choose to set up a trust?
Once the testamentary trust is created, upon the death of the trustor its execution taskes place (what you included in your trust is executed), which is the responsibility of the trustee, generally a fiduciary institution, which ensures:
That the person holding the fiduciary position is an institution of recognized solvency.
The permanence and continuity of the fiduciary work, since the companies have practically unlimited life.
That the work of the fiduciary be carried out by specialized institutions.
That the testamentary trust be executed for the benefit of one person: the heirs as included in the trust.
When deciding whether to go for a will or a trust, you should know their differences to determine what is best for you.
Trusts, for one, require more paperwork and will cost you more money, since you must transfer all of your assets into the trust and pay a yearly fee to the fiduciary; which is why they are usually recommended to those who have investments such as shares, ownership in companies, and cash deposits, which increase the amount of the assets, and if it is considered that the potential heirs do not have the necessary skills to manage or direct the invested assets.
Wills on the other hand, will cost you less money (essentially the legal fees for setting a will) and will require your loved ones to go through probate to acquire your assets, which as mentioned is not required for testamentary trusts.
Whether you decide to set up a trust or a will be sure to consult with a trusted legal advisor who will be able to properly guide and assist you so that your estate and loved ones are fully protected should something were to happen.
Do not hesitate to contact us should you have any questions or comments. We will be glad to answer your questions and help you with your planning.