Difference between a Will and a Trust: That is the question a few people have asked when making estate plans.
Wills and Trusts are both essential components in estate planning.
Through them, your properties are secured because you have the assurance that they shall be passed on only to the persons who you prefer and who you have personally indicated in your documents.
But despite such similarity in concept, these two estate plan components are very different from each other.
What is a Will
A Will is a vital piece of a general estate plan. The Testator or maker of the Will needs to allot an “executor” to assume responsibility of the properties secured in his Will if he bites the dust.
As an executor to the properties, he is required to look after the estate, collect and evaluate the assets, pay any ongoing liabilities by means of the income of the estate or a levy on the properties, and partition what stays of the settlements among the recipients named in the Will.
Such division might be as per the way dictated in the said Will.
A Legal Will, in general, is a document that expresses certain guidelines as to the upkeep or transfer of your property when you pass on.
Certain of properties dealt with by wills include land, cash, ventures, and individual or family paraphernalia to which you have possession and disposal rights.
You can change such will whenever if you wish to do as such. Anyhow, it will have no legitimate impact yet until your eventual death.
What is a Trust
Meanwhile, what the difference is between a will and a trust lies primarily on the manner of administration and distribution of the properties involved in the total estate.
A Trust, in its most fiduciary sense, is an agreement entered into by the owner (or Trustor) of the estate and a third party, referred to as the Trustee.
The purpose of the agreement is mainly to hold the assets in Trust on behalf of the beneficiaries specified by the Trustor; but only until such time when these beneficiaries are able to receive their claims. Such time shall have to be indicated by the Trustor.
A Will covers just those properties that are under your name when you pass away. It doesn’t cover properties held in joint inhabitance or in a trust.
A Trust, on the other hand, covers simply the properties that have been appointed to the Trust. For the property to be joined in a Trust, it must be put for the sake of the Trust.
Difference between a Will and a Trust
Another thing to take note of as to what the difference is between a will and a trust is that a will has to undergo probate proceedings while a trust does not.
The will is governed by federal statutes regarding estates and successions. Also, it involves a broader and heavier coverage that is the overall assets of an individual.
Hence, it must be supervised by the court under probate proceedings and made part of the public record.
A Trust, on the other hand, covers only particular properties so it can be managed outside a probate court in order to save time and money.
And since it involves only specific claims, a Trust can remain private so the details are among the parties involved only.