Straight answers about trusts and wills

A will is a legal document that says who receives your property after you pass away, and who you want to carry out those wishes (your executor). If you have minor children, it is also where you name the guardian you would want to raise them.

A trust is a legal arrangement in which a person or institution (the trustee) holds and manages assets for the benefit of the people you name (the beneficiaries), following the rules you set. A trust can take effect during your lifetime and continue after you pass away.

A will generally goes through probate and only takes effect after death. A trust that has been properly set up and funded can manage your assets if you become unable to, and can pass them to your beneficiaries without going through probate. Trusts can also add detail, such as when and how a beneficiary receives money.

Not always, and it depends on your assets, your family, and your goals. Many people who have a trust also have a simple "pour-over" will as a safety net for anything not placed in the trust. A licensed attorney can tell you what fits your situation.

Probate is the court-supervised process of validating a will, paying debts, and distributing a person's assets. It can take months or longer, may involve court and legal fees, and is generally a matter of public record. The details vary by state.

Assets that are titled in the name of a properly funded trust generally pass to your beneficiaries without going through probate. Assets with a named beneficiary, such as life insurance and retirement accounts, also typically pass outside of probate.

Your state's laws decide who receives your property and who is in charge of your estate. The result may not match what you would have wanted, and it can create delays or disagreements for your family.

A revocable (living) trust can be changed or canceled while you are alive, so you keep flexibility and control. An irrevocable trust generally cannot be changed once it is set up, which can create different legal and tax results. Which one is appropriate depends on your goals and is a question for an attorney and tax professional.

A trust only controls the assets that have been placed in it. Funding means retitling assets, such as a home or bank account, into the name of the trust, or naming the trust as a beneficiary where appropriate. A trust that was never funded may not do what you expected.

Choose someone who is trustworthy, organized, and willing to take on the responsibility. Many people name a backup, and some choose a professional or institution. It is worth talking with the person first so it is not a surprise.

A revocable trust generally does not reduce your income taxes or estate taxes on its own. Some other types of trusts are used for tax planning. Talk with a tax professional or attorney about your situation.

No. Life insurance is paid to the beneficiary named on the policy, not according to your will. That makes it important to keep beneficiary designations current. In some cases people name a trust as the beneficiary, which is something to review with your attorney.

Many people also put a financial power of attorney and a health care directive in place. These documents let someone you trust handle your finances or medical decisions if you are unable to. They are usually prepared along with a will or trust.

Review them after major life events, such as marriage, divorce, a birth, a death in the family, a move, or a big change in your finances. Even without a major change, a review every few years is a good habit.

Wills and trusts are legal documents, and requirements vary by state, so they should be prepared or reviewed by a licensed attorney. I'm happy to talk through how they fit into your overall retirement and protection plan.