Many people who own property or have a certain amount of assets need to draft an estate plan. A will is one type of estate plan, and a trust is another type. They are often confused with each other because they do share some similarities, but there are many differences between them as well. Estate planning is a good idea for most people. It is a good way to make sure that family members are provided for in the event of your death. If you do not have an estate plan, then it can be left to the state to figure out who will receive your property after you die. By having an estate plan in place, you will be able to make sure that your assets go where you wish them to go.
Will: What Is It?
Wills are the best way to leave the property in your estate. It is a legal document outlining what you wish to happen to your property, who should receive it and who should be your executor. A will is binding after it has been signed and witnessed, although this can vary from state to state. The state may not recognize a will if it was not properly drafted according to its statutes. If the state does recognize your will, then it will be upheld. This means that you will not receive a court hearing where someone argues against your wishes. Only if the judge decides that there was something wrong with your will can you receive a court hearing. If you have no will, then the state will usually decide what happens to your property.
To learn about what a will can and cannot do, refer to this article from a law firm that focuses on wills.
Trust: What Is It?
A trust is another type of estate plan that many people find useful. This document is also a legal document, but it outlines how your property should be distributed after you die. Many people use trusts to put money into an account for a loved one or to leave their home or other assets to charity. If you have a trust and have named a trustee, then the trustee will manage your property for the benefit of someone else. He or she will be responsible for making sure that any taxes are paid on the property, that it is maintained and other similar tasks. When you die, your trustee will be responsible for passing on your assets to whomever the trust says. The one benefit of trust is that you can change it when you want to.
Will Vs. Trust: Key Differences
Implementation Date:
A will must be signed and witnessed before it goes into effect. If there is a time limit for implementation, you will have to meet that deadline, or you will not be valid. A trust does not need to go into effect until after the person who made it dies. This means that you can change your mind about what happens to your estate until you pass away.
Probate Process:
Since a trust does not need to be approved by the courts, it is not subject to the probate process. A will is subject to the probate process, however, since it is a legal document that goes through the court system when you pass away. This means that your property will be in limbo until you pass away and the court declares who will inherit your property. The probate process can take time, which is why many people choose to have a trust instead of a will.
Privacy:
Since trusts do not have to go through the probate process, they are free from the privacy laws that apply to will. That means you can name anyone as your trustee, and your trust will remain private. If you leave a large amount of property in your will, then it becomes a public record. That also means that anyone can know about who you want to receive your property and how much. With trust, there is no need for any of that information.
Cost And Complexity:
While a trust is much less expensive, it can be more complicated to create. A will is simple and not difficult to draft. There are many legal forms that you can use as well, so you will not have to worry about creating your own form. An estate plan attorney can help you with this as well, so you do not have to worry about creating the document yourself. That means that the cost of creating a will is significantly lower than that of a trust.
Final Thoughts:
The two types of estate plans are not the same, and they are used for different purposes. A will is a legal document that will eventually be upheld after you pass away. It lets you make sure that your wishes are met, even in the event of your death. A trust is also a legal document, but it does not go through the court system since it does not have to be approved. Some people choose to have a trust instead of a will because it can free their property from the probate process.
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