Key Differences between Wills and Trusts

Properly established wills and living trusts are the best way to manage your estate and can help ensure that your assets pass on to the intended people or causes. While wills and trusts can seem similar because they dictate who receives your assets, there are some differences that you should know about. The main one is that a Last Will and Testament becomes effective when an individual passes away, while a Living Trust serves its purpose right from the moment it gets signed and funded. If the overlap of wills and trusts seems complicated, you don't have to worry because we will explain their differences in detail and help answer any questions you may have.

Wills & Trusts: What Sets Them Apart?

A will is a written document that represents how your estate and assets will be distributed after passing away. The legal document will include stipulations and will go into effect upon death. Wills are also used as instructions in terms of appointing an executor of the will, directions for the funeral, and a guardian for minor children. In addition, state law requires witnesses and a notary to be present during the formal signing process.

On the other hand, trusts can be used both during the life and after the death of the estate owner. The grantor can set the terms for how the assets are managed, distributed and even remove beneficiaries from the list at any point. Trusts become effective from the moment of signing and funding them by transferring current assets into the newly formed Trust. Furthermore, trusts are not used only as instructions for asset distributions; they can also be very effective in minimizing taxes on the estate and to keep the asset distributions confidential.

Key Differences

• A will goes into effect after death, while a trust is effective after signing and funding it;

• Trusts provide creators with more control over when and how their assets are distributed;

• Wills allow creators to name guardians for their kids and pets, manage asset distribution, and give final instructions for the funeral;

• Trusts come in many types (revocable, irrevocable, asset protection, charitable, constructive, special needs, tax by-pass, and more);

• Wills are public documents, while trusts are not;

• Trusts can be used to avoid probate (the create can skip the court proceedings).

Can You Have Both a Will and a Trust?

If you can't choose between a will and trust, you should know that you can have both. They are used for different things, and therefore, careful and precise Estate Planning is essential. A Living Trust would allow one to manage assets and their distribution during lifetime and after death. It’s advisable to also create a Pour-Over Will so that all assets, within the trust or outside of the trust, are properly distributed.

Final Words

Wills and trusts offer different benefits, and this is why choosing the "best" one is not possible because they favor diverse situations. You need to begin by evaluating your situation and determining your goals and needs for estate planning. We are here to help create an Estate Plan that works to accomplish your specific goals.