Wills and trusts are two important estate planning tools for Nevada residents. Both methods allow you to document how you want your inheritance distributed among your heirs, but a trust is the more effective way to accomplish this goal. Here are some of the differences between a will and a trust.
Wills
A will allows you to bequeath individual items, an entire estate or a combination of the two. An executor, usually named in the will, carries out your instructions after your death.
In Nevada, processing occurs through a probate court if assets exceed $20,000 or the will includes real estate. The court allows for a streamlined process if the estate is worth less than $200,000 and owes no money. However, if the estate’s value exceeds $200,000, the process becomes more complicated and lengthier, delaying the distribution of the assets.
One other problem with wills is that someone may contest them in court. An overlooked heir may claim that another party unduly influenced you or that you were not mentally competent when you signed the will. The court could overturn your wishes.
Trusts
Unlike a will, a trustee distributes trust assets, negating the need for probate. In addition, an heir cannot contest a trust’s directives in court. A trust can contain anything valuable, including money, cars, real estate, stocks, bonds, and jewelry. Revocable and irrevocable trusts are a critical component in estate planning.
Revocable trusts
A revocable trust has many advantages. You can name yourself the trustee, manage your assets and change beneficiaries. However, it does not protect you from creditors or reduce the estate’s taxable value. Upon your death, it becomes an irrevocable trust managed by a trustee who cannot change your directives.
Irrevocable trusts
You no longer own the assets you transfer into an irrevocable trust. Once you document your wishes for your beneficiaries, the trustee cannot change them, and creditors cannot seize this type of account. An irrevocable trust lowers your taxable value if you fund it with some income-producing assets.
There is no reason to delay. Start planning your estate today!