Creating a proper estate plan requires making intentional decisions, and in order to do so, one should be knowledgeable about the subject. In a previous blog, you learned about the differences between wills and trusts in an estate plan.
Along with knowing the difference between the two, it is important to also consider key factors that affect the use and application of either a will or a trust. Here are a few important factors to be aware of.
Types of beneficiaries
The age and abilities of the beneficiaries of your estate may be significant in deciding whether to use a will or a trust. In the case of parents with small children, a will may be beneficial for detailing the selection of a guardian and any specific requirements for the care of a child and the distribution of an inheritance over time. By the same token, a trust can help to secure that a child receives the greatest amount of an inheritance over the course of his or her life, which may be more beneficial, depending on the asset level of the parent. For non-parents, determining whether the means or amount of the distribution matters most can still be helpful.
Large or small estate
In general, trusts can be quite beneficial for large estates or estates with high-level assets, while wills can provide enough directives for smaller estates. Also, trusts do not require probate, which may help to limit contesting and expedite the distribution process.
Though North Carolina does not have its own estate tax, an estate may still face taxation from the federal government. Being familiar with the law can help you understand what may affect your estate and which route would be most beneficial.
Though these factors do not run the full gamut, they cover some key aspects that may affect your use of a will or trust. Take some time to consider these factors and do your own research to determine the best choice for you in obtaining your ultimate goal with your estate.