This Is the Difference Between a Will and a Trust
More than 60 percent of American adults have nothing in place to look out for their loved ones when they pass away. While it might not seem like a priority when you’re still working, setting up a comprehensive estate plan is essential for your loved ones’ continued financial wellbeing.
To do this, you have two main choices: set up a will or establish a trust.
Before you can choose the right option for your needs, you need to understand the difference between a will and a trust. Here’s what you need to know.
What Is a Will?
A will is a legal document that explains where you want your assets to go and who you want to inherit specific types of property when you pass away. You can also use your will to outline any particular funeral requests you have or to appoint guardians for your pets, children, or other dependent individuals.
Most people make a will as soon as they have other people they need to care for, but you’re free to write your will at any point.
The document only comes into play when you pass away. This means that your property remains your own even if you’re incapacitated. Your loved ones won’t be able to inherit anything until you pass away.
What Is a Trust?
A trust is a type of agreement that provides protection both while you’re alive and when you pass away. If you have a revocable living trust, you’re able to make changes whenever you want. This means you’re free to move property around, give money to different people, or sell off assets as you see fit.
Once you die, a new trustee or manager takes over the agreement. They’ll either oversee the distribution of the property as outlined in your agreement or manage the funds in the trust according to the terms you set.
The trustee is often a professional that you select or appoint to take over for you in the event of your death. This could be a preferred attorney, financial professional, or responsible relative of your choosing.
Which Is Right for You?
Both wills and trusts are incredibly important but they accomplish separate things. Will documents allow you to make provisions for your death while trusts allow you to manage your property while you’re alive while also making arrangements for how to manage those assets when you pass away.
Think about what you want to accomplish and the types of concerns you have. Choose the arrangement that provides the most protection for your situation.
Understanding the Difference Between a Will and a Trust
Knowing the difference between a will and a trust is essential to help you figure out the best way to manage your estate. Both offer different benefits and, even better, you can use both types of agreements to look after those you love.
Just make sure to work with a professional to set the documents up. This way, you’ll know that your loved ones will be able to honor your wishes properly.
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