Published on August 19, 2014
Even if you have a trust, you still need a will to take care of any holdings outside of that trust when you die. Trusts are legal mechanisms that let you put conditions on how and when your assets will be distributed upon your death. They also allow you to reduce your estate and gift taxes and to distribute assets to your heirs without the cost, delay and publicity of probate court, which administers wills. Some also offer greater protection of your assets from creditors and lawsuits. Inheritance can be a loaded issue. By being clear about your intentions, you help dispel potential conflicts after you're gone. In 2013, estates under $5.25 million are exempt from the tax. Amounts above that are taxed up to a top rate of 40%. By leaving all your assets to your spouse, you don't use your estate tax exemption and instead increase your surviving spouse's taxable estate. That means your children are likely to pay more in estate taxes if your spouse leaves them the money when he or she dies. Plus, it defers the tough decisions about the distribution of your assets until your spouse's death.