When people go to plan their estate, they may be given the option to write a will or use a trust. Wills and trusts, while they may seemingly act the same, have very distinct differences that make each unique for their purposes.
You shouldn’t have to be on the fence when planning your estate. Here’s what you should know to help make your decision:
Is a will really what you need?
Wills and trust are both legal documents that help people plan how their assets are given out after they pass away. It’s most likely you’ve heard someone who owns a will and last testament.
A will helps ensure the deceased has their final wishes granted by distributing their estate to friends and family. This could mean having your estate given to a spouse or closest relative or distributed evenly amongst friends and family. A will also allow someone to decide on an executor, or someone to oversee their estate after they’re gone.
No one is too old for a will and it’s often recommended to set up a will once you turn legal age. The chief disadvantage of a will is that it must go through the probate process, which is time-consuming and expensive.
Is a trust better for your goals?
A trust, on the other hand, holds more legal protection than a will. Trusts are created by having a trustor assign a trustee to hold onto their assets until it’s time to distribute them to the beneficiary. In other words, you can protect assets you intend to give to an heir from being disputed – or depleted.
Trusts can also have rules that restrict how and when assets are taken. That could mean preventing a child from taking out all their inheritance when they turn 18 years of age and giving them more assets if they decide to go to college – this way they may be incentified to continue schooling.
Trusts are not part of probate, and they often have tax advantages for your heirs, as well.
When creating a will or trust, it’s often best to seek legal assistance that can ensure your assets won’t be the subject of disputes. Even one minor issue could cause problems in the most stable families.