When a Trust is Better Than a Will in Estate Planning?
October 26, 2021 - Categories: Legal Articles
Unless you’re an estate planning specialist or a lawyer, there’s a good chance you never gave the difference between a will and a trust a second thought. You might not even have realized that there is a difference. But these are two distinct options you can use when planning what will happen to your estate one day, and there are a few good reasons you might want to choose a trust.
The Difference Between a Will and a Trust
The first major difference between a will and a trust is that a will only comes into force after you die. Whereas a trust comes into effect as soon as it is created. Which means that you can set up a trust long before you die, and make sure that your wishes will be granted. It also means you can give away some of your assets before you die.
Trusts also are not required to go through probate. Probate is a long process that takes place after you die, to make sure that there are no legitimate claims or disputes against your will. It can take months or even years for an estate to get through the probate process, which means your loved ones could be faced with significant financial hardship.
Trusts also cannot be contested, unlike wills. So, once they are set up, your money and assets are guaranteed to go to the people you want them to.
Sometimes, trusts will pay out money to beneficiaries based on their milestones, rather than your death. So, for instance, you could create a trust for your children or grandchildren, which pays out when they reach a certain age, or graduate college. You don’t have to be dead for that to happen.
Why Not Both?
The good news is that this is not an either-or decision. You can have both a will and a trust. You can also create several trusts with different purposes.
So, if you want to make sure that your wishes are followed as closely as possible, or you want to start giving away money and assets before you die, create a trust. Whatever you want to keep until after you die, put it in your will.
While it’s not recommended, you could buy a will kit from pretty much anywhere, and as long as it’s filled out and witnessed correctly, it would be legal. Trusts, however, are much more complex. If you plan to distribute some or all of your assets via one or more trusts, you want to hire a professional to set it up for you.
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