What Is the Difference between a Trust and a Will?
Trusts and wills are both important instruments used in estate planning. Each serves a different purpose, so it is not necessarily a matter of whether you should select one or the other. You may wish to set up a trust in addition to having a will, for instance. The following explains some of the basic differences between trusts and wills. A knowledgeable Kingwood estate attorney can help you create a strong estate plan.
A will is an essential testamentary estate tool. It names your assets and instructs survivors on how you wish for them to be distributed. As such, a will by its nature takes effect upon your death. This is one of the major ways in which a will is distinct from a trust, for a trust takes effect immediately. A will must be in writing, signed and witnessed. Provided that it is set up properly, a will serves to do the following:
- It is a set of instructions to survivors on how assets are to be distributed.
- It lists the names of your beneficiaries and assets, and explains how these assets are to be distributed after you die.
- It designates the executor of your estate.
- It establishes who the guardian to your children will be, if applicable. This guardian will have the responsibility of raising your children after you die.
When you, the grantor, dies, the executor has the responsibility of making sure that the will is presented to the probate court in your jurisdiction. Probate is a necessary process which establishes the validity of the will, identifies all assets and debts in the estate, and makes sure that any creditors are paid and assets distributed to beneficiaries. If you do not create a will before you die, the probate court will designate you as having died “intestate,” and will make decisions regarding your assets, beneficiaries and children which may or may not be in accordance with your intentions.
Trusts serve a different function from wills. Many people have both in their estate plans, for setting up a trust does not eliminate the need for a will. A trust, then, is a legal representation in which an individual designated by the creator, the trustee, holds assets for the benefit of another, named the beneficiary. Assets held in trust can be stocks, real estate, cash, bonds, automobiles, jewelry, interest in a business, etc. Two of the major reasons people place at least part of their estate in trusts is to avoid probate and taxes.
Unlike your will, a trust goes into effect immediately. There are numerous different types of trusts, each of which provides certain advantages. Some trusts, for instance, allow you to use at least some of the assets within them while you are alive, while others do not. Moreover, just as you can change your will, some trusts allow the grantor to change them, but others do not.
For Help Setting Up Your Estate Plan
It is important for anyone who has children or a significant other to develop an estate plan. A Kingwood estate attorney can work with you to help you create an estate plan that most effectively utilizes your assets for the benefit of your loved ones. Call Peterson Law Group today at 281-609-0664 or 832-786-5062.