Most of us have probably heard the term “Trust” and “Will” but not everyone is aware of the differences between these two. Both are useful services for estate planning but serves different purposes.
Having any of these is important to protect your loved ones but which one to choose and what is the difference between living trust and will?
In this article, We will try to understand the meaning and key dissimilarities between living trust and will. Before we find the difference between these two, let’s find out what are they and how they work?
What is Trust?
Trust is a method that one can use to transfer their assets. It allows you to authorize someone to handle your assets for the well-being of your third party or your beneficiary.
You can create a trust for various functions and there are various types of trust that one can choose to create. However, there are two categories of Trust: Living and Testamentary.
A Trust helps you to transfer your property and assets to your beneficiaries and loved ones once you passed away. It is called living trust because it is created while the owner properly is alive. It is revocable because the trustor can change it during his life.
However, the trustor holds the ownership till he is alive. Trust becomes operational after the death of the trustor and passes the property without going to the probate court.
Also, after the establishment of trust, you don’t have to pay any court or attorney fees. Your property will be passed directly and immediately to the nominees you have mentioned in your trust.
A testamentary trust is a great option for those who have minor children or grandchildren. With the help of testamentary trust, you can mention when your assets will be given to your heirs. It helps you to distribute your assets when your kids reach a certain age, graduate, or gets married.
Testamentary trust comes in the effect after the death of the trustor. The person who creates the testamentary trust appoints a person called a trustee who manages the assets before they are completely handed over to the beneficiary.
The Quicken Willmaker & Trust 2021 Premium Vs Quicken Willmaker & Trust 2021 will help you to know which software offers better will and trust maker features. So that you can get an effective option that can make a testamentary trust for you and for your family.
What is Will?
In legal terms, Will refers to an official document that you can use to express your last wishes. The person who creates the will called a testator. You can also mention what you want to do with your property after your demise. A Will can also be used to appoint guardians for your minor kids, forgive debts, funeral wishes, etc.
The will undergoes court probate once the testator dies in which the court ensures that the last wishes of the same are carried out the way he wanted. The testator can revoke or edit the will whenever he wants in any manner before his death.
There one thing to note, if a person created multiple wills so the latest one will be considered and executed to his legal heirs. Here legal heirs refer to parents, wife, and children, etc. You can use the quicken will maker coupon code for making a will on your own.
Difference between a living trust and will
Before we explain the key differences between will and living trust, have a look at this will vs trust chart for a quick comparison.
|Will vs Trust Chart|
|Wil vs Trust||Will||Trust|
|Guardianship for minor kids||✔||🗶|
|Challenge in court||✔||Usually not|
|Active on signing||🗶||✔|
|Can be revised||✔ if a revocable trust||🗶|
|Rules around inheritance||🗶||✔|
Let’s see the key differences between Will and Trust in the below-outlined points.
- A Trust is a legal arrangement made by a trustor in which he authorizes someone as trustee to hold and handle his assets for the benefit of his heirs. On the other hand, A Will is a document that declares the arrangement and distribution of assets and property of the creator.
- A will comes into effect only after the demise of the creator. Unlike, trust comes into effect once the assets are transferred to the trustee.
- Will goes through the probate process in which the court check if the mentioned wishes in the will are being carried out the way the testator wanted or not. However, Trust doesn’t go through any probate process.
- The testator can revoke or make any changes in the will whenever and in whatever manner he wants before his demise. On the other side, revocation of a trust depends on the type of trust. i.e a revocable trust can be revoked anytime but in case of an irrevocable trust, you can not make any changes once it comes into effect.
- A Will becomes a public document after the testator’s demise whereas, trust remains a private document.
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Can you have both a will and a living trust?
Yes, You can have both at the same time because both, Will and Trust work for different purposes. A Will let you decide the guardians for your minor kids, distribute your property and assets, appoint an executor for your assets, and declare your final wishes.
On the other side, Trust enables you to manage and distribute your assets during the trustor’s life and after his death. However, an expert or your attorney will tell you what suits you the best for you as per your current situation. So do discuss with them before choosing one.
Is a will better than a trust?
Will is an official document that is controlled by the public and court while the trust is private and controlled by the family. The major disadvantage of having a living trust is, it allocates the assets to children only when they reach a certain age and the trustee can misuse the assets provided by the trustor. We would recommend you to use a combination of will and trust.
Should I have trust or will?
Choosing between trust vs will is a personal choice, However, you can also have both at the same time. A will usually is cheaper and easy to create and on the other side, trust is expensive and a complicated legal document.
In our opinion. Whether you create trust or not but having a Will is important. There are various important reasons for having a will such as you can mention the type of arrangement you want at your funeral, assign a legal guardian for your children, and allotment of your assets to minimize family conflicts after your demise.
Conclusion: Difference between Living Trust And Will
It is important to have a will or trust or both to settle your assets earlier than later because they can ensure the assets allotment the way you want.
So choose wisely between trust and will. We hope, now you are well aware of the differences between a living trust and will and can choose the best suitable one for yourself.