Most people are aware that the government imposes a Federal Estate Tax and a Federal Gift Tax liability on transfers of property. Wills are documents that define the administration and distribution of an estate when the owner dies. Beneficiaries and alternate beneficiaries are defined in a will and it affects all assets that are not automatically passed on through operation of law or contract. Wills are simpler and less expensive to prepare than a revocable living trust. Living wills are another type of will, in which the healthcare provisions of the trustor are defined in the event that he or she may not be able to express these preferences due to incapacity.
Trusts are a useful instrument in estate planning for many reasons.
A trust allows assets and properties to pass to the trustee or trustees directly without first going through probate. It protects the funds from any creditors who may wish to collect from the trustee, as well as providing a way for an estate to pass to beneficiaries without being heavily taxed.