(Newswire.net — December 23, 2021) –When thinking about planning for one’s estate, most people automatically believe a will is all that’s needed. However, that’s not the case. A trust is often an invaluable part of estate planning. There are three notable differences between wills and trusts that are important to understand.
What is a Will?
A will is a legal tool that is used in estate planning. It’s a legal document that allows you to dictate where your assets and property go after you die. It can also be used to name trusted people who can care for your minor children. Your will can also state how you want your affairs to be managed upon your death.
While a will is an important legal document, it’s usually not enough to determine that all of your wishes are met when you are no longer around. This is because if you only have a will, your estate will still have to go through the probate process. Probate is a court process that can take a long time to be completed. It can also prevent your heirs from getting what you have deemed theirs while it goes on and can take years before they finally get their inheritance.
What is a Trust?
A trust is another type of legal document used in estate planning. It allows you to name beneficiaries who will receive your property and assets. However, it’s a different type of tool than a will as it can actually hold your property to protect it from going through probate. You can also transfer property directly into the trust to bypass estate taxes that would otherwise be placed on that property.
Specifically, if you create a revocable living trust, it allows property held within to be transferred to your beneficiaries immediately upon your death. However, there are different types of trusts you can choose from. It’s wise to explore your options so that you can be assured of choosing the one that best suits your needs.
It’s important to note that you must also fund a trust after you have created it. This involves transferring assets into it. When you do this, it means that the trust has legal rights to those assets and they are, technically, no longer in your name.
What are the Legal Differences Between Wills and Trusts?
Although these two important estate planning documents have certain aspects in common, they have three distinct legal differences. A will allows you to name guardians for your children and your pets. Trust doesn’t have this function, but you can form different types of this document.
While a will allows you to choose who gets your assets and property upon your death, it’s possible for someone to challenge the will. If a beneficiary disagrees with a specific member of your family getting certain property, they might contest the will. A trust cannot be contested. Its purpose is to hold onto assets and property intended for your beneficiaries, but it cannot be contested at all.
A will allows you to determine how your final arrangements should be handled. A trust, on the other hand, is designed to give you better control over how your assets and property are distributed upon your death.
These are some of the most notable differences between wills and trusts. If you have been debating whether to include one or both documents as part of your estate planning, you may want to consider creating both.