Everyone has heard the terms “Will” and “Trust,” but not everyone knows the differences between the two. Both are useful estate planning devices that serve different purposes, and both can work together to create a complete estate plan.
One of the main differences between a Will and a Trust is that a Will goes into effect only after you die, while a Trust takes effect as soon as you create it. A Will directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. A Trust can be used to begin distributing property before death, at death, or afterwards.
What is a Trust?
A Trust is a legal arrangement through which one person called a “trustee,” holds legal title to property for another person, called a “beneficiary.” A Trust usually has two types of beneficiaries. The first type receives income from the trust during their lives and another one receives whatever is left over after the first set of beneficiaries dies.
What is a Will?
A Will covers any property that is only in your name when you die. A Will does not cover property held in joint tenancy or in a Trust. A Trust covers only property that has been transferred to the Trust. In order for property to be included in a Trust, it must first be put in the name of the Trust.
Key Differences between Wills & Trusts
Another key difference between a Will and a Trust is that a Will passes through probate. That means a court oversees the administration of the Will and ensures the Will is valid and the property gets distributed the way the deceased person wanted. However, a Trust passes outside of probate, so a court does not need to oversee the process, which can save time and money. A Trust can remain private, where a Will will be on public record.
Estate Planning Attorneys
A lawyer should review your situation and create a Will or Trust that is legally enforceable and handles your assets and properties according to your wishes. Individuals who are considering creating a Will or Trust may wish to speak with an estate planning attorney in Raleigh NC.
Still have questions about what all goes into putting together a Will or a Trust? Thankfully for you, you’re in the right place. Maginnis Howard can answer your questions regarding estate planning.