What is the Difference Between an Estate and a Trust?
Your estate comprises everything you own. It is your net worth, which includes:
- Personal property (jewelry, tools, furniture, etc.)
- Bank accounts
- Retirement accounts
- Life insurance policies
- Debts (credit cards, mortgages, student loans, etc.)
Whether you have an enormous estate with millions of dollars in assets or a simple estate, someone will inherit what you own after you die. You can choose to create a will and outline how you want your possessions distributed or you can choose to create a trust.
A trust is a way to leave your estate to your loved ones, charitable organizations or anyone you want to inherit your personal belongings. By creating a trust, you can possibly achieve tax savings, keep your estate out of probate after you pass away, protect your assets from creditors and ensure that your estate is kept private (out of public record). You can also name your trust as a beneficiary to life insurance policies.
There are two basic types of trusts from which to choose:
- Revocable living trusts can be altered at any time. You still have access to and control of your property while you are alive and of sound mind. You still pay taxes on the income that you earn because you are the still the owner of the assets.
- Irrevocable living trusts cannot be altered or revoked. You essentially give up control over your assets with this type of trust and appoint a specific person (trustee) to manage your assets (no longer part of your estate) on your behalf. The main benefit here is the tax benefits.
There are many other types of trusts that have more specific applications such as asset protection trusts, charitable trusts, special needs trusts and more. A Denver trust attorney like the team at The Brown Law Firm, LLC can help analyze your unique situation and recommend the best course of action to protect your assets.
All estates are important and should be protected. To create a will, trust or any type of estate plan, contact the Denver estate planning lawyers at The Brown Law Firm, LLC: (303) 339-3750. You can also send us a message online to set up an appointment.