Will vs Trust: What’s the Difference?
Do you know your finances well? If not, there should be a will and trust in place from the get-go. This document allows you to specify how you want your financial relationships handled should you die.
But what is the difference between a will vs trust? Both can be relatively complicated terms to understand all the intricacies. Let’s clear things up!
Below, we’ve got a quick look at the difference between a will and a trust.
Defining Will
When it comes to estate planning, there are a lot of terms that get thrown around. One of those terms is “will.” But what is a will?
Will is a legal document that defines how you want your property and belongings to be distributed after you die. But there’s a lot more to it than that.
For starters, you need to create a will if you want to have any say in what happens to your property after you die. If you don’t have a will, the state will step in and distribute your belongings according to its laws. This may not be how you want things to end, so it’s important to have a say in the matter.
Creating a will is also important if you have young children. In your will, you can appoint a guardian for your children in the event of your death. This is an important decision that you should not take.
If you’re thinking about creating one, it’s important to consult with an experienced estate planning attorney. They can provide a guide to creating a will and help you understand the process.
Types of Will
There are many different types of wills. Each type has its own unique benefits that can help to protect your assets and your loved ones. Here are some of the most common types of wills.
Living Will
This type of will allows you to stipulate your wishes about medical treatment and end-of-life care if you become incapacitated.
Testamentary Will
This other type of will allows you to specify how you would like your assets to be distributed after your death.
Joint Will
A joint will is another type created by two people, usually spouses. It stipulates the division of assets between them upon the death of the first person.
Defining Trust
In a trust, one person (the trustee) manages the property on behalf of another person (the beneficiary). The trustee has a fiduciary duty to manage the property in the best interests of the beneficiary.
Trusts are an important part of estate planning because they can help you with the distribution of your assets after your death. Without a trust, your assets would be subject to probate, which is a public process that can be costly and time-consuming.
A trust can also help you avoid probate if you become incapacitated. If you name a trustee to manage your assets, your loved ones can avoid the hassle and expense of going through probate.
There are many different types of trusts, but they all have one common goal: to help you protect your assets and your loved ones. A trust can transfer wealth to your heirs, minimize taxes, and provide for your spouse or partner.
Types of Trust
Just like a will, trusts have many different types, each with its own purpose. Here’s a quick overview of some of the most common types of trusts used in estate planning.
Revocable Trusts
As the name suggests, revocable trusts can be changed or revoked by the Settlor at any time. This type of trust is often used to manage assets during the settlor’s lifetime.
Irrevocable Trusts
Unlike revocable trusts, irrevocable trusts cannot be changed or revoked once they’ve been created. This type of trust is often used to protect assets from creditors or estate taxes.
Testamentary Trusts
Testamentary trusts are created through a last will and only come into effect after the settlor’s death. This type of trust is often used to provide for minor children or disabled beneficiaries.
How To Choose The Right Estate Planning Option
As you approach retirement age, you may begin to think more about your legacy and how you want your assets divided after you die. You may also have questions about how to protect your assets while you’re still alive. Estate planning can be a complex process, but it’s important to make sure your wishes are carried out according to your specifications.
One of the first things you’ll need to decide is whether you want to use a trust or a will to distribute your assets. Both options have their advantages and disadvantages. Here’s a brief overview to help you choose the right estate planning option for you.
A trust can be a good option if you want to have more control over how and when your assets are distributed. You can specify exactly how you want your assets to be used, and you can also change the terms of the trust at any time. Trusts avoid probate, which can be a lengthy and expensive process.
Besides, wills are simpler and easier to set up than trusts. They’re also less expensive to create and maintain.
You can choose a guardian for minor children and specify how you want your assets divided. One drawback of wills is that they must go through probate, which can be a time-consuming and expensive process.
The decision comes down to what is best for you and your family. Speak with an experienced estate planning attorney to learn more about your options and make the best choice for your situation.
Will vs Trust: Which Is Right For You?
While a will and a trust both deal with your assets after you die, there are some key differences. A will goes through probate, which can be time-consuming and expensive. A trust avoids probate and can distribute assets to your heirs immediately.
So, if you’re estate planning, you should talk to an attorney to figure out which option is best for you. Is it will vs trust? Or both?
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