Wills and trusts are both realty planning tools that may help ensure that your assets are protected and handed on to your descendants, except your spouse, which is typically not an issue.
A will is a written document that communicates a deceased person\’s wishes, including naming guardians for minor children and bequeathing property and monetary assets to friends, family, or charity. A will only become effective after death.
A trust, unlike a will, becomes effective the day it is created, and a grantor can designate how assets will be distributed before death in it. There are two types of trusts: irrevocable trusts, commonly used for tax purposes and cannot be changed once established, and living trusts, which the grantor can change.
Whenever wills are made, they have to be probated, a legal process in which a court administrator examines them. If family members contest the will, the process can be drawn out and contentious. At the same time, Trusts do not need probate and cannot be challenged once the grantor dies.
Wills
The most common type of will is a testamentary will. It is a legally enforceable agreement that lays out how you want your affairs and assets to be handled when you pass away. It might also include details about how you want your funeral or memorial ceremony to be held. A will is a crucial aspect of estate planning, and numerous online will generators may help you create legal documents and forms. Experts recommend seeking legal advice from a lawyer who can help you with your unique estate planning needs.
A will lists all of one\’s assets and liabilities, as well as any family heirlooms, contents of safe deposit boxes, real estate, and automobiles. You can leave your property to your heirs, friends, or a charity.
After the death of a person, a will can be beneficial in estate transfers and other legal processes, but there are certain drawbacks to be aware of. For example, anything left by will must go through probate court, and your estate will become a public record.
Trusts
Another kind of estate transfer is a trust, which is a fiduciary structure in which you allow a third-party control of your assets for the benefit of your beneficiaries.
A trust can be created for various reasons, and there are numerous different types of trust. Trusts can be divided into two categories: living and testamentary. Through the use of a will, a testamentary trust can be formed. Another form of trust that can be utilised to bypass probate court is a revocable living trust.
Difference between a will and a trust
- Wills and trusts are both practical estate-planning tools, but they have significant differences. When the grantor signs the trust, it becomes active. The testator\’s will does not take effect until they die.
- Your will is probated when you die, but trust is not.
- In a will, you appoint guardians for any minor children and include any funeral or memorial arrangements or wishes, and vice-versa in the case of trust.
Wrapping Up
Trust will make the process of transferring an estate after your death easier while avoiding the time-consuming and sometimes costly procedure of probate. However, if you have young children, naming a guardian in your will is critical to protecting both the minors and any inheritance. It is a personal choice between a will and a trust, and some experts recommend having both. A will is typically less expensive and easier to set up than a trust, a costly and often complex legal document.
