When it comes to estate planning, two common options that people consider are a will and a trust. While both serve the same basic purpose of outlining how your assets will be distributed after your passing, there are some key differences between the two. In this blog post, we’ll explore the differences between a will and a trust and help you determine which one is right for you.
What is a will?
A will is a legal document that outlines how your assets will be distributed after your death. It allows you to name beneficiaries for your property, name guardians for minor children, and specify any other wishes you may have for your estate. A will goes into effect after you pass away, and is subject to probate, which is the legal process of administering a person’s estate.
What is a trust?
A trust is also a legal document, but it has some key differences from a will. A trust is a legal arrangement where a trustee holds and manages assets for the benefit of beneficiaries. You can create a trust while you’re still alive, or it can be created after your passing.
Differences between a will and a trust
The main difference between a will and a trust is how they are administered after your passing. A will goes through probate, which can be a lengthy and expensive process. The probate court oversees the distribution of assets and ensures that all debts and taxes are paid before distributing the remaining assets to beneficiaries. In contrast, a trust does not go through probate, as the assets are already owned by the trust and are managed by the trustee. This can save time and money, as well as providing greater privacy.
Another difference between a will and a trust is the level of control you have over your assets. A will only takes effect after you pass away, and can be changed at any time before that. A trust, on the other hand, takes effect as soon as it is created. You can specify how the assets in the trust should be managed, and can even specify conditions for distribution to beneficiaries.
Which one is right for you?
Deciding whether to create a will or a trust depends on your personal circumstances and goals. If you have a smaller estate and don’t anticipate any disputes or challenges to your will, a simple will may be sufficient for your needs. If you have a larger estate or want to avoid probate, a trust may be a better option. A trust can also be useful if you want to leave specific instructions for how your assets should be managed and distributed.
In conclusion, both a will and a trust serve the important purpose of outlining how your assets will be distributed after your passing. Understanding the differences between the two can help you determine which one is right for you. Consider consulting with our succession team to make sure you're making the right decision.
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