When we talk about estate and assets management, will and trust are the common terms that pop up in our minds. Although both the terms appear to have a similar meaning as people refer to them interchangeably when talking about estate planning. But both of them have entirely different meanings and modus operands.
If you wish to safeguard your family’s assets, you must be wondering which option is better and offers more flexibility and benefits. Will and trust are the documents having solid legal backing that aids the management and distributions of assets to the beneficiaries. Before deciding which one is better for you, you must understand their meaning and differences perfectly.
Difference between trust and will
Will: Will is the instrument used to transfer the assets of the owner after his death to the concerned beneficiaries. After your death, the representative or the executor of your will can file with the court in order to prove that the assets in his possession are valid. The assets and properties mentioned in the will are then appraised and the remaining assets are equally distributed between the concerned beneficiaries. Also, the debts are paid off. This entire process is directed by the court and is known as probate.
Although, the will is considered an important legal instrument most people still do not prefer to make one. Not having a will makes the equal distribution of assets amongst the beneficiaries quite difficult and it is also not a favorable situation for the owner.
Trust: A trust is a legally binding contract made between two or more parties, wherein enlisted are the rights and duties of the trustee, appointer, and the beneficiaries. This ensures effective management of your trust even after you catch a disease that prevents you from making logical reasoning or after your death. The appointer appointed on your behalf will do the necessary distribution between the beneficiaries. Trustees can be an individual, financial institution, or an amalgamation of both.
If you are not comfortable with probate, you can also sign up for making a trust for your assets. A trust assures a more equal distribution of estate amongst the beneficiaries. This way you can avoid court proceedings as in the case of a will everything is presented into the public domain. Also, trust can revocable or irrevocable.
Trust or will: what to choose?
While it is not mandatory for you to use only either a trust or a will as you can opt for both in the management of your assets plan. But still, you want to go for only then there are various aspects to consider such as the purpose of making the assets plan or the probate laws in the country where you reside in.
You should opt for a trust if you have a big property or substantial wealth and want to assure their perfect distribution. If you do not want to take the burden of taxes imposed on assets or gifts that the beneficiaries have to bear, then trust is the right option for you.
On the other hand, a will is a perfect choice in case you have a normal amount of assets and properties and just want to make sure that they should be fairly distributed among the beneficiaries or your family members, then a will would suffice your needs. Especially when the probate laws in your state do not bother you at all.