Understanding the Difference Between Wills and Trusts

Are you trying to plan your Estate? Are you confused about whether you should use a Will or Trust? Perhaps both?

Don’t worry…you’re not alone!

It can be hard to know which one is right for you, but here’s the good news:

With essential knowledge and understanding of the differences between Wills vs. Trusts (what they are, when each can best be used, and how they interact with each other) you can take complete control of your future.

You see, the terms "Will" and "Trust" are often used interchangeably, but they’re very different legal documents with different goals.

Many people think that having a Will is enough to distribute their assets after they pass away–in some cases it is. But in others a Trust can be a more practical and effective option.

The Differences Between Wills and Trusts

Estate planning is a crucial aspect of everyone's life no matter what age.

It ensures the continuity of wealth after one passes on, easing stress and conflicts among family and loved ones.

Two commonly used legal documents for estate planning are Wills and Trusts.

A Will is a legal document that outlines an individual's wishes regarding the distribution of assets and properties after death. It appoints an executor to oversee the distribution of the assets.

It can be revised and updated at any time during the owner's lifetime and needs to be witnessed by two witnesses.

Once the person passes on, the Probate Court oversees the execution of the Will and ensures the legal transfer of assets according to the individual's wishes.

A Trust is also a legal arrangement in which a person (the grantor) transfers their assets to a trustee to manage them for the benefit of themselves or others (the beneficiaries).

The trustee is legally bound to follow the terms of the Trust, which can be customized to meet the grantor's specific wishes, such as distributing assets over time, providing for special needs, or avoiding probate and taxes.

There are different types of Trusts, such as Revocable Trusts, Irrevocable Trusts, Living Trusts, and Testamentary Trusts, each with its advantages and disadvantages.

For example, a Revocable Trust can be modified or revoked by the grantor during their lifetime, but it does not offer asset protection or avoid estate taxes. An Irrevocable Trust cannot be changed by the grantor, but it can provide for tax savings, long-term care planning, and creditor protection.

So, which one is better, a Will or a Trust?

That all depends on your individual circumstances, goals, and preferences.

If you have a simple or modest estate, few heirs, and no special needs or goals, a Will may be sufficient for you.

However, if you have substantial assets, complex family dynamics, minor or disabled beneficiaries, or charitable intentions, a Trust may be more appropriate for you.

When it comes to planning your estate, it's essential to have a clear understanding of your options. It’s advisable to consult with an experienced estate planning attorney who can guide you through the process, assess your needs and options, and help you choose the best course of action for you and your loved ones.

Have Estate Planning Questions? Contact our offices today!

DISCLAIMER: The content contained herein is for general informational purposes only.  These materials do not constitute legal or other professional advice.  We do not accept any responsibility for any loss that may arise from reliance on this information.  No reader should act or refrain from acting based on information contained in this article without seeking advice of counsel.