What is a will?
A will is a legally bound document that details your wishes for how you want all of your physical, intellectual, and digital assets to be handled after you die. This also holds information on guardianship of any of your children under the age of 18.
A last will and testament is different from a living will.
A living will: This document spells out your health care preferences in the event you become terminally ill and unable to communicate. Designed to provide guidance to your family and doctors, a living will only details your preferences regarding major health and life support decisions, such as tube feeding and the use of pain medications.
A last will and testament: This document specifically addresses what should happen to your assets, possessions and children under 18 when you die.
These documents may be used separately or in tandem. For instance, if someone falls ill, their living will might state that they don’t want to be kept on life support. Once they passed away, their last will and testament would dictate how to divide their assets.
What is a trust?
A trust is a legal agreement that names someone to hold the property for the benefit of others. The trustee is the person or company that manages trust property and “beneficiaries” are the people who benefit from the trust. A living trust is a trust created while the property owner is alive and it is revocable for the lifetime of the trust maker. In contrast, a “testamentary trust” is one that takes effect when the trust maker dies. Some people use a will in addition to trust to distribute their property. A living trust is revocable, so you can change it during your lifetime. After you die, the trust becomes irrevocable and your successor trustee distributes trust property to beneficiaries following the terms of the trust.
Is there an advantage in using a trust instead of a will?
The main advantage of using a trust is that a trust helps to avoid probate. Probate is the court process through which assets are transferred and debts are paid off. The process can be very expensive and can take a long time. A trust has the ability to cover things that a will can’t cover which include retirement accounts, jointly owned property, and life insurance policies. A will becomes public after the property owner dies. However, a trust stays private. Only the beneficiaries and the trustee are informed of the trust. You can write your trust in such a way that you do not need all the property to transfer to beneficiaries at once; instead, you can transfer the property over time. A parent could set up a trust to take care of the bills of an adult child with special needs without burdening their child with a lump sum payment.
What is the difference between Will & Trust?
Both transfer an estate to heirs, but only a trust can skip probate court.
