A will instructs the probate court on how to distribute your assets and property to your beneficiaries. Your named executor oversees the transfer of your property’s ownership; he or she also has responsibility for settling your debts and taxes.
As noted by Kiplinger Personal Finance magazine, your will may include instructions for an individual to take care of your minor children. If you require someone to perform substantial caretaking duties or financial management, however, you may wish to consider a trust.
How may a trust take care of my children?
By creating a trust, you may name a trustee and provide instructions regarding how to manage your assets on behalf of your beneficiaries. For example, if you own real estate, you may wish for your trustee to rent your property, maintain it and allocate the income on behalf of your surviving children.
A trust may include detailed instructions about your children’s education, religious activities and health care needs. Your trustee has a duty to carry out your intentions as described in the trust. You may also provide a timeline of when to dispose of any property or assets, and how to distribute the proceeds to your trust’s beneficiaries.
How may I fund a trust to provide for my heirs?
Funding options include transferring your assets and property to your trust. You may also name your trust as a beneficiary to a life insurance policy or your retirement accounts. The trust may provide directions for how your trustee will invest, save or spend the cash.
After a will has gone through probate and ownership of your assets has transferred to your intended beneficiaries, it may no longer require further action. A trust, however, may continue to generate income or make use of your assets as you have specified in your instructions.