There is plenty of legal jargon when it comes to estate planning, and the difference between a trust and a will is often confused. A will, according to CNN Money Magazine, “governs the distribution of nearly everything in your estate.” A trust, on the other hand, deals with specific assets, “such as life insurance, or a piece of property.” While the idea of drawing up a trust may seem like something that is only necessary for very wealthy families or real estate magnates, that’s not so. According to a different CNN Money Magazine article, a trust is useful if your family has a net worth of at least $100,000 and meet one of the following conditions:
- you have some real estate holdings, money invested in business, or money invested in fine art
- you think it’s best that your belongings be stratified upon distribution to your heirs—that is, they don’t receive everything at once, or you want to set parameters (ie: they’ve graduated from college first, etc.)
- you want your surviving spouse to be taken care of, but you want the majority of your assets to be left to your children after your spouse dies
- you’d prefer to maximize estate-tax exemptions
- you’d like to provide for a disabled relative without disqualifying him or her from Medicaid or other governmental assistance
There are several different types of trusts. According to the National Association of Financial and Estate Planning, one such trust is an IRA Checkbook Control Trust, “a special purpose trust which is either fully or partially owned by a self directed individual retirement account.” This can be useful if your retirement savings are in an IRA, of which very few permit direct ownership of real estate or other non-traditional investments.
Determining the best estate plan for you is a complicated process, and is best figured with the help of a qualified estate-planning attorney. Contact a dedicated Illinois estate-planning attorney today.
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