If you live in Delaware and you do not have an estate plan, you may only have a vague idea of how estate planning in general differs from a will or a trust. It is important to understand these differences so that you know which steps to take to protect your assets and your beneficiaries.
Your estate plan
You can think of your estate plan as the umbrella for your will, any trusts and anything else regarding how your assets should be handled in case of your death. Your estate plan can also appoint a guardian for your minor children. Other documents that may be a part of your estate plan include beneficiary designations and powers of attorney, which may appoint people to manage your health care and finances if you are unable to do so.
Your will
Your will appoints an executor to manage your estate, can name a guardian for your child and specifies how your assets will be distributed. Most wills have to pass through a legal process called probate before beneficiaries receive their assets.
Trusts
If you want to avoid probate, you can use a trust to pass assets to your beneficiaries. Unlike a will, a trust is also private. This can reduce the likelihood of conflict over your choices although sometimes, estate and trust mediation may still be necessary. There are many different kinds of trusts, and they can be used in different ways. For example, you could put the trustee in charge of deciding when distributions are made to beneficiaries. Trusts can also protect assets from creditors.
For some people, a simple will is sufficient for passing their assets on. Others will have more complex needs that a trust is appropriate for. Understanding the different functions of these vehicles helps you prepare the estate plan that is right for you.