People are often confused about whether wills and trusts are the same. So, are they? No, not really. Trusts are basically legal agreements that are used to safeguard your assets and are used according to a person’s preference. If you are creating an estate plan, trusts can sometimes be made along with the wills to be used after the passing of the person. However, it is important to note that there are advantages and disadvantages to both wills and trusts. If you are in the process of drafting them, you should get in touch with a lawyer for guidance. Remember that trusts have a limited term period, so in the event that you pass away without a will, the state can decide how to divide your assets.
What are wills?
A will is basically used to determine asset distribution after a person dies. This can include decisions to be made after the death. One can also name the executor and the guardians of children in the wills, and how you want to hold your funeral. Another crucial factor is that wills can be used to safeguard assets until minors reach a specific age. Moreover, as per state law, one also needs to sign and witness the will. In addition, the will must be handled by the probate lawyer and executed by an executor of your choice, whom you mention in the will.
What are trusts?
A trust is a formal agreement that enables the transfer of property from a trustor to a trustee. Also, note that the trusts provide instructions to the trustee on how to manage the trusts. Along with that, it mentions how to distribute assets to specific people and handle assets in the future. Note that the onus is on the trustee to adhere to the guidelines of the trust for the benefit of the beneficiaries.
The difference:
The one difference you need to keep in mind is that wills are used after the death of the person, while trusts start to work the moment the assets are transferred. Moreover, one can make a “living trust” while they are still alive. Trusts can prove to be very beneficial when it comes to estate planning.
Final thoughts:
Hopefully, you have better clarity on what it means to draft a will and a trust. If you wish to get started on yours, get in touch with a lawyer.
