When planning for your future and your families future, you must ensure that your assets are distributed according to your wishes. Knowing the differences between a trust and a will are essential in estate planning. They serve different purposes and offer unique benefits.
Definition and Function
A will is a document that outlines how you would like your property and other assets to be distributed after your death. In your will you must also nominate guardians for your children, dependents, or pets. A will only goes into effect after your death and must go through the probate process, which is a court-supervised procedure in which the document must be validated, and your assets are distributed.
A trust, on the other hand, is a legal contract that allows a third party, or trustee, to hold assets on behalf of a beneficiary. Your assets are available to transfer before or after your death. In simpler terms, a trust is a legal document that outlines how and when your assets will be transferred to your loved ones. Trusts can be written during your lifetime (living trusts) or after your death (testamentary trusts). Living trusts can help manage your assets during your lifetime and their distribution at the time of your death, often without the need of a probate.
The Main Difference between a Will and a Trust is that, a will has instructions on how to distribute your assets after you die. Whereas, a Trust is a legal document that will allow you to transfer your assets at any point, alive or dead. A major reason that people will choose a trust, is that a trust does not have to go through the probate process. Instead their beneficiaries are available to access their inheritance on their own time, not the courts.
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