by Blaize Shepherd

Created on: December 01, 2008   Last Updated: January 31, 2012

Life brings us many surprises, many good and some bad. Being prepared for these surprises in the event something bad happens, can protect you and your loved ones as well as the hard work you have done in your life time. You can do this by preparing early, to protect your assets and your loved ones while ensuring that your last wishes are carried out by having a will or trust made.

Wills

Wills are created and don't become effective until after your death. At which point the executer of the estate, distributes and controls assets according to your wishes. None of your assests are transferred until after your death. There is a time period, upon death that it takes for the executer to be appointed leaving assets in limbo for a short time. Probate only deals with assets you own at the time of your death. Assets are distributed to the heirs and once the time period for claims has passed, those with claims against the estate, cannot come back to your heirs and make a claim. Many states, like Michigan, for example have simplified probate processes, for those with assets under 100,000, that eleminates the need for a trust, saving, time, money and hassle.

A good reason to consider a will would be tax advantages, as they are thier own taxpayer which gives an advantage over trusts, as they are usually not. Probate can be lengthy and in some cases a couple of years. It is the most commonly used, process are familiar and easy to work with, they are usually less expensive in the beginning with less detail and paperwork compared to trusts. Wills are required to go through probate and generally costs a small percentage of your assets worth at the time of your death.

Trusts

Usually, the number one reason for creating a trust is to avoid the lengthy process of probate. Trusts are more time consuming to create and consist of more technical details, once created, they are effective immediately and in place while you are alive. There is no delay or probate to deal with, they are continually effective. A Trust has upfront costs to begin with, but they save money in comparison to the expense and time lost with probate cases.

There are many types of trusts available, in Michigan for example is an AB trust for married couples to save money on estate taxes, trusts to protect your home and assets from creditors, trusts for children of previous relationships, charitable trusts, trusts to give your kids tax free gifts when older, medicare, disability, life insurance and special needs trusts

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