What Is the Main Difference Between a Trust and a Will?
Did you know that if you die without a will or trust a probate court takes control of all your assets?
That’s right. Instead of your estate passing along to your successors as you wish it will be divided up based on state law. The good news is all you have to do to avoid this tragedy is set up a will or trust.
So, how do you do that and what exactly is the difference between a trust and a will? Keep reading to find out.
What Is a Trust?
A trust is a relationship created between three parties—the settlor, the trustee, and the beneficiaries. The trustor gives the trustee the right to manage their assets for the benefit of the beneficiaries.
You can choose to create two different types of trusts.
You can create a living trust where the settlor keeps ownership of their assets while alive. Another option is to create a testamentary trust by setting out instructions for the creation of the trust in a will that becomes active upon your death.
Trusts can reduce estate taxes and make sure that the assets of the settlor are professionally managed.
What Is a Will?
A will is a legal document that outlines how someone wants their estate managed after their death.
Many people view a will as a more common and simple document, but it covers some very important factors of estate planning. It can explain instructions for allocating personal property and outline any funeral wishes.
Most importantly, it is where you state who would care for any children left behind.
Main Difference Between a Trust and a Will
There are some key differences between trusts and wills that can help you determine which one you need.
For many people having both is a smart way to go. That way they can address all aspects of estate planning without letting important details slip through the cracks.
When comparing the two pay attention to the areas of care for children, handling of property and assets, and the court processes involved.
If you have children, a will is an invaluable document to have recorded. It allows you to pick who their caregiver would be and specify any other personal wishes.
With a trust, you can’t designate who would take care of your children after you are gone. A court will do that according to state law, instead.
Property and Assets
If you have any expectations for the property and assets you will be passing on to loved ones it is a wise choice to have a trust put in place. Trusts have rules regarding an inheritance that helps to make them difficult to challenge in court.
In contrast, a will lacks any inheritance rules, and contesting a will in court can be a much simpler process.
Trusts can typically avoid the lengthy and oftentimes expensive process of the probate court and remain a private record. In contrast, wills must pass through probate court and is a matter of public record.
Whether it is a will, a trust, or both that is right for you, it is smart to have the help of a professional when creating any legal documents.
A probate lawyer is able to guide you through the process of drafting a trust or will. Their experience is a guiding light through times of loss and uncertainty.
A Trust or Will, Which Is Right for You?
Hiring a lawyer can make a huge difference when it comes to the success of your estate planning.
Instead of worrying about the difference between a trust and a will, go through the process with the help of a caring professional. They will help you decide which one is best for you.
Keep exploring our site to learn more about smart legal decisions you can make today.