A difficult subject for any family to discuss, is how a family member’s estate should be taken care after that family member’s death. While there is a variety of vehicles through which you can organize your estate, this blog post will examine two of the most common estate planning tools—wills and trusts.
Under Indiana law, a will, which most people think of when they consider estate planning, is essentially a document in which a person declares how his or her property should be distributed upon death. A will can be written by any person of sound mind who is at least eighteen (18) years old. Wills must be done in writing and must be witnessed by at least two persons who must also sign the will. Generally speaking, if someone dies without a will, that person’s property will be distributed according to Indiana’s probate statutes.
A trust, on the other hand, is created when a person (who is called the settlor) transfers property to another (called a trustee) to be kept by the trustee for the benefit of a third person (called a beneficiary). An excellent example of this is when parents do not want their children to receive property, immediately upon the parent’s death, but would rather they receive the property at a later age. In such a situation, the trustee holds and protects the property until the children reach the age designated by the settlor. Like a will, to create a trust, Indiana law requires the person be over the age of eighteen (18) and be of sound mind. A trust, unlike a will, does not pass through probate. In other words, when property is transferred by the settlor into the trust, and the settlor later dies, the courts will not be involved in the distribution of trust money or property unless a dispute arises between the parties.
Both trusts and wills have their own separate advantages and disadvantages. It is important to consider these factors when determining how to plan your estate. The subject of the next blog post will be to highlight some of these differences.