We work hard throughout our lives and acquire assets and property to provide for ourselves and our loved ones. It is important to protect those assets even after we pass. An experienced estate attorney can do so by guiding you through the estate planning process, which often includes either a will or a trust.
So, what separates the two terms and ideas? Do they share anything else in common except for the fact that they really gain importance upon the death of the owner? Well, find out below.
What are wills and trusts?
Wills are legal documents that specifies the distribution of the assets of a person (the “testator”) after he/she dies. This document is written in the presence of two witnesses to ensure that the testator is of sound mind and that the will actually reflects his/her wishes.
Trusts, on the other hand, are systems set up by trustees to make sure their investments and assets maintain their usefulness even if death limits their involvement. The trust instrument declares which successor trustee bears the full responsibility of holding up the business or property after the beneficiary passes away. Trusts can be either living trusts or testamentary trusts. Testamentary trusts are created through a will.
What exactly differentiates wills from trusts?
Purpose
Wills are essentially meant to disburse wealth amongst the people designated by the testator. Trusts, however, are more strategic. Trusts are meant to keep a property placed in a trust up and running. A will provides a tool for people to share their total properties and resources while trusts function to give savings on taxes and deal with certain limitations like age or disability.
Privacy
One remarkable thing about trusts is that they don’t require any measure of legal involvement in their processes. Thus, trusts have the perk of keeping the financial details of the property placed in the trust as secretly as possible. It saves the time and resources used in passing the property through a probate.
A will is a legal document in the first place, which leaves the financial details of the testator under the eyes of the court since the court oversees the validation of the will as well as following up on ensuring that the wishes of the testator is followed to the letter. In doing so, the contents of the will are usually entered in the public records.
Activation Time
Wills become active upon the death of the writer of the will, trusts do not. Trusts can be used even while the beneficiary still lives, benefiting him/her in cases like that of disability. Additionally, trusts can also function to transfer the property placed in the trust to the designated successor.
Scope
Trusts are naturally narrow in application since they can only affect the future of the properties placed in the trust. Wills are, on the other hand, are wider reaching. Wills contain the writer’s distribution plan for every property that he/she owns, and estate planning attorneys can help prepare the legal documents necessary to perfectly convey the wishes of the property owner.
Wills and trusts are advantageous for different reasons and in different conditions, and that is why it usually requires experienced estate planning attorneys to find the best fit for your needs.