Wills and trusts are important tools that help ensure your wishes are carried out. A will is a critical document that establishes how your assets are handled after you die. A trust can provide tax benefits and protect your estate from creditors

Here are some ways that wills and trusts can be important:

A will can help prevent costly disputes over the distribution of your assets. It can also ensure that your wishes are carried out and your loved ones are provided for. A will can also specify how your property, investments, and possessions should be distributed among your heirs.TrustsIrrevocable trusts can provide tax benefits and protect your estate from creditors. Revocable trusts generally do not provide these things.

A will is a simple legal document that provides instructions on how to distribute property to beneficiaries after death, while a trust is a complex legal contract that allows you to transfer your property to an account to be managed by another person.

If you want to ensure there are no gaps in your estate plan, you can have both a living trust and a will.

Creating a living trust is a good option for those with a complex estate (multiple properties, investment accounts, and/or sizable assets).

The two basic trust structures are revocable and irrevocable:

Revocable trusts: Can be changed after they're created and can help avoid the probate process.

Irrevocable trusts: Typically can't be changed or amended after they're created

Here are some types of trusts:

Qualified terminable interest property trust (QTIP)

Provides for the surviving spouse while allowing the grantor to remain in control after the death of the surviving spouse. QTIPs are a popular tool for estate planning, and preserve wealth via estate tax exemptions.

Grantor retained annuity trust

An irrevocable trust that provides an annuity for a specific amount of time. Upon completion of the annuity period, the remaining money and property is transferred to those named.

Credit shelter trust

Also known as a bypass trust, this is a common type of trust used to eliminate or reduce federal estate taxes. It's typically used by a married couple whose estate exceeds the applicable exclusion amount that is exempt from federal estate tax.

Charitable remainder trust

Can provide a consistent source of income, particularly in retirement, all while benefiting a charity. There are two primary types: unitrusts and annuity trusts.

Marital trust

A legal entity established to pass assets to a surviving spouse or children/grandchildren. A general power of appointment, an estate trust, and a QTIP trust are three types of marital trusts.

Life insurance trust

There are two main types of trust for life insurance: absolute trusts and discretionary trusts. The main difference between these two types is the level of flexibility