For families and individuals across the Low Country, securing their future and protecting the assets they’ve worked hard for is a top priority. When discussing how to handle your finances and property after your passing, two terms often come up: Estates and Trusts. While both are foundational to a robust estate plan, they are distinctly different tools.
At Weiner, Shearouse, Weitz, Greenberg & Shawe, LLP, we believe in guiding our clients with the knowledge and compassion needed to build a secure future for generations to come. Here is a clear breakdown of what you need to know about these essential legal concepts.
What is an Estate?
Put simply, your estate is the total of all the property you own at the time of your death. These things include your bank accounts, real estate, investments, vehicles, and personal belongings.
The legal process for distributing these assets is known as probate. A deceased person’s will names an Executor (or Personal Representative) who is responsible for managing the estate through the court. The Executor gathers the assets, pays any debts and taxes, and then distributes the remaining property to the heirs named in the Will. If a person dies without a Will (intestate), the court appoints an administrator, and the distribution follows state law, which may not align with your wishes.
What is a Trust?
A Trust is a legal arrangement that allows a third party, or the Trustee, to hold and manage assets on behalf of a Beneficiary (the person or people who will eventually receive the assets). The person who creates the Trust is known as the Grantor or Settlor.
Assets transferred into a Trust are no longer legally owned by the Grantor, but by the Trust itself. This separation offers a major advantage: avoiding the probate process. Since the assets are already owned by the Trust, they can be distributed privately and often much faster, minimizing costs and delays.
Trusts are versatile and can be used for many goals, such as protecting assets from creditors, providing for minor children, managing business succession, or minimizing estate taxes.
Preparing for a Secure Future
No matter your stage of life, planning is critical. Here is what you need to prepare for both your estate and your potential trust:
- Preparing Your Estate (Will-Based Planning)
- Take a look at your assets: Compile a complete list of your financial accounts, real estate, and major personal property.
- Identify Beneficiaries: Clearly decide who you want to inherit specific assets.
- Choose an Executor: Select a trustworthy individual to manage the probate process. They must be prepared for the legal responsibilities involved.
- Designate a Guardian: If you have minor children, the Will is the place to legally name who you wish to raise them.
- Preparing a Trust (Trust-Based Planning)
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- Define Your Goals: Decide what you want the Trust to accomplish (e.g., probate avoidance, tax savings, creditor protection). This determines the type of Trust you need (Revocable Living Trust, Irrevocable Trust, etc.)
- Select a Trustee: Choose a reliable individual or institution to manage the Trust assets according to your instructions. This is a vital decision, as the Trustee has a fiduciary duty to the beneficiaries.
- Fund the Trust: The Trust is useless until you transfer ownership of your assets into its name. This process, known as “funding,” is where many people miss a critical step, rendering the Trust ineffective. This includes re-titling deeds and changing beneficiary designations on accounts.
Building a secure future requires more than just filling out forms; it requires a tailored strategy. Whether a simple Will is sufficient for your needs, or a complex Trust structure is necessary to protect your family’s future, our experienced attorneys are here to guide you through every decision with confidence. Contact us today to start the conversation.
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Contact us for advice regarding your individual situation.