What’s the Main Difference Between a Will and a Trust?
Did you know that according to one recent survey, 68% of Americans do not have a will?
While not having a will doesn’t impact your day-to-day life, it’s something you should take care of before it slips your mind. We often don’t plan for the future or what will happen to our loved ones or estate.
But what’s the main difference between a will and a trust? There’s a lot of confusion surrounding the two, so we’ve put together this simple guide to clear everything up.
Overview of Wills and Trusts
A Will and a Trust are both estate planning documents, but there is an essential difference between them.
A Will is a document that details instructions for what to do with a person’s property after death. It handles carrying out someone’s wishes and distributing their assets as stated in the Will. The Will is often used to name an executor.
A Trust is an entity that holds and manages specified assets while the person is alive. The Trustee handles carrying out the instructions in the Trust document and distributing assets to beneficiaries based on a predetermined timeline.
Wills and Trusts can be created to provide asset protection, asset distribution upon death, and reduce taxes. However, they vary in complexity, and the distribution of assets will be handled.
Key Differences Between a Will and a Trust
A Will and a Trust are two different estate planning tips typically used to ensure the transfer of a person’s assets upon death.
The main difference between a Will and a Trust is in how the transfer of assets is handled and what happens to the assets once transferred.
When writing a will, you need to know a document outlining how a person’s property and assets will be distributed to their named beneficiaries upon death. A Trust is an arrangement where one person (the Trustmaker) entrusts the management of property and assets to another person (the Trustee).
The Trustee handles managing the assets and distributing them to the named beneficiaries. A Trust can take effect while the Trustmaker is still alive, while a Will only takes effect upon the owner’s death.
Additionally, all property transferred through a trust will remain protected and private, while all transfers made through a Will become a matter of public record.
Consult with a trusted legal advisor and estate planning attorney to understand which choice is right for you.
Understanding the Difference Between a Will and a Trust
The main difference between a Will and a Trust lies in what they regulate and when they become effective.
Will govern the distribution of assets upon death and become effective upon death. A Trust, on the other hand, provides asset protection during life and after and can even offer tax advantages.
To ensure an estate and the advantages of each are correctly handled, it is essential to speak with an experienced attorney.
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