People in Iowa who are creating an estate plan might wonder whether they need a will or a trust. Both manage how assets are distributed, but they differ in a number of significant ways.
There are many types of trusts, but the most commonly used one is a revocable living trust. This is a document that takes effect on being created. Any number of assets can be placed in a trust, including homes, investments and vehicles. A trustee manages a trust for the beneficiary. A revocable trust can be changed or revoked by the creator.
A will is a document that takes effect when a person dies. It appoints an executor to manage the estate. Most wills must go through a public probate process. Trusts remain private. A trust can be used to manage assets for an individual who becomes incapacitated while a will cannot. A will can be used to appoint guardians for any minor children while trusts can protect their assets until they are of legal age. Once a trust is created, assets must be transferred into it. This can include assets that pass by beneficiary designation. Wills cannot control what happens to assets that pass this way. There are varying costs associated with both wills and trusts, and individuals may want to consult an attorney about their use in an estate plan.
There are a number of other considerations in estate planning. For example, people may want to appoint someone to take over health care decision making if they are incapacitated. If they do not have a trust set up in a way that allows someone to do the same for their financial matters, they might want a power of attorney that can grant this power. An irrevocable trust may offer asset protection that a revocable trust cannot.