Chances are you have heard of the terms will and trust, but do you know the differences between them? Many times, people use these terms interchangeably not understanding what each one of these does and which one is best at certain times. If you’ve been considering planning your estate, it is important to know which one is right for you. If you are looking at planning your estate and naming beneficiaries to it, you need to have something in place. There are many similarities and differences between the two terms and it is important you understand them so you know which one to use.
Will
When it comes to planning a will, you need to know that it only goes into effect once you have passed away. You are able to appoint beneficiaries to your estate. If you have property with someone else, you cannot include it in your will. You can only include property that you are the sole owner of. In a will, you can appoint a guardian for your children and determine the way you want your funeral planned. Basically, everything in your trust has to do with how things will happen after you die. A will has to go through probate and the court decides how the heirs receive the property. Everything gets distributed by the court.
It is much simpler to create a will than it is a trust. A will can be drawn up and signed by two people. It does not need to be notarized in order to be valid. Your will should dictate how the estate is handled from the heirs named to the estate to how the debts of the estates will be paid once you pass. Most people will require a will more than a trust. It is important that you have a will in place should the unthinkable happen. If not, your estate could end up in the hands of the court and cost your family lots of time and money.
Trust
While a will goes into effect once you have passed away, a trust goes into effect the moment you create it. This dictates not only what will happen to the estate after you pass, but it can also dictate what happens to it before you pass away. Should you fall ill and need your estate handled, a trust can determine who the property will be managed by. This is important should you become disabled or unable to make decisions about the property. Unlike a will, a trust can take care of any property that is transferred to the trust. Even if you aren’t the sole property owner, you can have property transferred to the trust in order to be covered.
Trusts can remain private and do not need to go through a court proceeding in order to be managed. This is great for your family since it will save them both time and money. Probate court can become a headache if everything is not clear. Many wills can end up in court for years.
