Advantages of Various Estate Planning Tools

There are different estate planning tools available. The table below provides a clear summary of how each tool compares with others. Consult with your estate planning lawyer for more information. Scroll down for the definitions of the terms used on this table.

Benefit of Planning ToolNo
Will
Basic
Will
Pour-
over Will
Living
Trust
AB
Trust
QTIP
Trust
Selectivity
Allows you to select the beneficiaries of your estateNoYesYesYesYesYes
Allows you to select the executor of your willNoYesYesYesYesYes
Allows you to select the trustees of your trustNoNoYesYesYesYes
Allows you to select the guardians for your childrenNoYesYesYesYesYes
Probate
Avoids the time-consuming and expensive probate processNoNoNoYesYesYes
Timing of Distributions
Permits distribution of assets to children other than simply upon reaching the age of majority (Ex. 1/3 at age 25, 1/3 at age 30, 1/3 at age 35)NoNoYesYesYesYes
Protection
Prevents conservatorship of estate ownerNoNoNoYesYesYes
Protects assets from creditorsNoNoNoYesYesYes
Estate Taxes
Assists married couples in reducing estate taxesNoNoPossibly, if properly designed to save estate taxesNoYesYes
Allows the first spouse to die to name the ultimate beneficiaries of his/her estate while still permitting the surviving spouse to utilize the assets while still deferring estate taxesNoNoYesNoNoYes

No Will — you have no will, and your estate passes to your heirs based on the laws of your state on intestate succession, or descent and distribution.

Basic Will — you have a will that distributes everything to your spouse, if living, otherwise to your children when they reach the age of majority.

Pour-over Will — you have a will that distributes everything to a trust.

Living Trust — a trust designed to avoid probate and provide asset management. Take note that each person is entitled to have the first $675,000 of his or her estate pass to his or her heirs without estate taxes, referred to as the unified credit. A basic living trust does not effectively use the $675,000 unified credits of both spouses. Because of this deficiency in a basic living trust, an AB Trust is often recommended to married couples with substantial assets.

AB Trust — a trust designed to make sure the $675,000 unified credit of each spouse is used to the full extent possible, while allowing the surviving spouse to make use of the assets of the deceased spouse during the remainder of the surviving spouse’s life.

QTIP Trust — a trust designed to permit a spouse to transfer assets to their trust while still maintaining control over the ultimate disposition of those assets upon the spouse’s death. QTIP Trusts are recommended in situations where a person gets married for at least a second time but has children from a previous marriage for whom they want to reserve assets.

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