When it comes to estate planning, many people think a will and a trust are the same. Although both are useful tools to protect assets and transfer them to one’s beneficiaries, they are distinct in terms of purpose and when they take effect.
If you’re choosing between the two, it’s essential to understand what they are and find out their similarities and differences. That’ll allow you to efficiently work with the will and trust attorney you will hire. Here is a list of essential information to help you learn more about wills and trusts.
A trust is an arrangement in which a trustee is allowed to hold assets on behalf of the beneficiaries. The deed is created to set out the conditions of the trust. This includes who the settlor, trustee, and appointor will be, plus what the trust contains and how it should be managed. Until the trustee distributes the assets, they remain in the trust.
A will is a document that indicates how your properties should be managed and distributed after your passing. The legal paper is prepared while you’re still living and becomes operational only after death.
When creating a will, you should identify the beneficiaries and which part of your properties should go to each of them. To ensure the instructions on the will are strictly followed, you need to appoint an executor.
For one, both tools provide you with ways to hold your assets and distribute them to your beneficiaries. They also appoint someone to manage the distribution of your properties.
In a will, that person is called an executor, while it’s termed as trustee in a trust. Selecting a person for this position is vital because they should act in you and your beneficiaries’ best interests.
The obvious difference is the time in which these legal documents become operational. In trusts, annual distributions of the assets while a person is still alive are common. Meanwhile, in a will, beneficiaries can only receive their loved one’s properties after their passing.
There is also a difference when it comes to the title of the assets. In a trust, it’s in the name of the trustee. In contrast, the title remains with you until your passing in a will.
There is no definite answer to this because the decision depends on your goals and circumstances. Many people choose a trust for asset protection and tax planning. Others prioritize succession planning, which is why they choose to create a will.
If you need assistance in creating a will or trust, choose an experienced attorney. They can provide the services required in fulfilling these documents.
Choose Beth Sparks Hunt Attorney at Law. Our legal practitioners have years of experience helping clients determine which arrangement is best for their goals and circumstances. Contact us to find out more.
