What’s the Difference Between a Trust and a Will?
Trust attorneys provide relevant legal help to whomever you name your trustee, that is, the person who is in charge of managing the trust. Trust attorneys therefore provide the legal services that are needed with regards to trusts and wills and set up a trust on your behalf.
What is a Trust?
A trust is a relationship whereby property or a pool of assets is held by one party for the benefit of another. Trusts are often created within wills – defining how money and property will be handled for children or other beneficiaries. You can also create a trust when you are still alive – a living trust. A trust is created to transfer title of some or all of your property to a trustee. The Trustee can be the person creating the Trust (the “Grantor”) or some third party. The trustee then holds title that property in the trust for the benefit of the beneficiaries. The property in a trust remains in the trust until some specified event occurs, such as your death or the beneficiary’s reaching a certain age.
A trust can be used for multiple purposes such as:
- To lower your estate taxes
- To indicate when your beneficiaries receive their inheritance
- To protect your assets
What is a Will?
A will is a legal document specifying your last wishes and includes details such as the name of a guardian for your minor. It indicates how you would like your personal and real property to be distributed at death and names individuals to manage the estate until its final distribution.
A will can be used for multiple purposes such as:
- To name an executor
- Name guardians for children and their property
- To decide how debts and taxes will be paid
- To serve as a backup to a living trust
Pro’s of a Trust:
- Trusts avoid probate. Beneficiaries therefore have quicker access to assets than assets transferred through a will.
- You have control of your wealth. You can specify the terms of a trust precisely, controlling when and to whom distributions may be made.
- You can set up a trust for specific purposes, such as to pay for a child’s education or to provide donations to a charitable organization.
- Your trust documents are effective immediately, so you can include things like end-of-life directives and who should act as your guardian in the event that you’re incapacitated.
- The Trust is a private document and is not a matter of public record. A will becomes a part of the public records upon the death of the person making the will when it is probated.
Con’s of a Trust:
- Creating a trust takes a lot of time, effort and money. You also cannot simply revoke a trust – there are certain steps one needs to follow.
- You still need to draw up a will. A trust doesn’t cover the function of a will.
Pro’s of a Will:
- Wills are cheaper and easier to create than trusts.
- You do not have to worry about retitling any of your assets or the other formalities that come with holding your assets in a trust.
- Professionals often charge a lower upfront fee to prepare wills.
Con’s of a Will:
- Wills are accompanied by estate taxes and the occasional long, drawn-out battle.
- Wills have to be probated, which means a court must supervise the distribution of the assets.
- You can’t use a will to name someone to take care of you if you’re incapacitated. They only come into effect once you have passed on.