Know The Difference: Trust Vs. Will
Protecting your assets and ensuring your family is well taken care of is an incredibly important responsibility. You want to ensure that your property and finances are protected and used in the fashion of your choosing once you’re no longer around. For this reason, estate planning is critical.
Many people aren’t aware of the different options available to them in this type of planning. Chances are, you’ve heard of establishing a trust, and you’ve heard of writing a will, but you may not understand the key differences when it comes to a trust vs. a will.
What is a Trust?
A trust is a legal arrangement that designates an individual, or an outside organization like a law firm, as the trustee who oversees all property and assets that are placed in the trust. The trustee retains the legal title to all of this property with the understanding that the trustee provides the designated beneficiaries with assets from the trust following the instructions of the person who set it up. A trust can start giving out income to beneficiaries right away or after the death of the person who set it up, or it can wait until certain conditions are met, such as the beneficiaries reaching a certain age, graduating from school, etc. A trust allows you to legally protect your assets and ensure that they fund your loved ones under the given conditions that you dictate, whether or not you’re still around.
What is a Will?
A will is a binding legal document that spells out where the property that is in your name will go when you pass, including money, property, personal assets, etc. A will can be written up with the help of a lawyer and updated as often as you like, allowing you to change the plans for your assets as your family grows, evolves, and ages.
What are the Key Differences When Choosing a Trust vs. Will?
When determining which planning tool is right for you, the first key difference to note is that wills are only relevant and valid at the moment of your death. Up until that point, they are a legal piece of paperwork, but they don’t really afford anyone in your will anything. A trust, on the other hand, takes effect the moment it’s created and can start doling out appropriate funds even while you’re alive to see it.
Another difference when analyzing a trust vs. will is that a trust will only cover the property that you explicitly place into the trust. In contrast, a will is written in a way that covers any property that is legally yours. So, an asset acquired after the trust was created will not be covered by the trustee or given to the beneficiary unless the trust is updated to include that asset. A will typically has a clause that dictates where the rest of your property, not explicitly named, will go.
If you need help understanding what you get in a trust vs. will, reach out to Tobin and Collins! We can help you with all your estate planning needs. We know this is an important and personal decision, and we’re here to guide you through each step of the way.