When it comes to your finances and your family, you want to make sure that everything is taken care of in the event of your death. For this reason, many people create both a will and a trust.
But what is the important difference between a will and a trust? We investigate that for you here in this article.
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The Main Difference Between A Will And A Trust
A will and a trust are both used for estate planning, and there are many benefits of estate planning that you should know. However, here is a breakdown of the differences between the two documents.
What Is a Will?
A will is a legal document, and writing a will states how you want your assets to be distributed after you die. You can use a will to leave your property to your family, friends, or charities.
A will is a public document, which means that anyone can read it, and not limited to just who you want to, or even just in the presence of courts or lawyers.
What Is a Trust?
A trust is a legal document that allows you to control how your assets are distributed after you die. With trusts being legal documents, you can specify exactly who gets what and when they get it.
It can be used to provide for your family in the event of your death and to protect your assets from creditors. Trusts are private documents, which means that only the people you specify can see them.
The Important Difference Between A Will And A Trust
One of the main differences between a will vs trust is that a will only take effect after an individual’s death, while a trust can be created and funded during an individual’s lifetime.
Trusts can also be irrevocable or revocable, which means that they can be dissolved or changed by the grantor at any time, or they can be set up so that they cannot be changed.
Another difference is that assets held in a trust are not subject to probate, which means that they can be distributed to beneficiaries more quickly and privately.
When Should You Use A Will?
So, when should you use a will? If you want your property to be distributed according to your wishes and you don’t mind the probate process, then a will is a good option.
A will is also to be used if you plan on distributing your property after you pass away since this only takes effect upon your passing. There are many benefits of a will, and knowing these will help you decide if you need one.
When Should You Use A Trust?
On the other hand, you can use a trust to protect your assets from creditors, lawsuits, and estate taxes. You can also use a trust to provide for your family in the event of your death.
Trusts also can take into effect at any given point in time of your choosing, so if you have a multiple-year plan, then using trusts might be good for you.
Plan Ahead For The Uncertain Future
No matter if you want to use a will or trust, and based on the difference between a will and a trust, it’s always best to do estate planning ahead of time since you don’t know what the future holds. So don’t wait, get to planning now!
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