Even though having a will protects your loved ones and your assets, many Americans do not have wills. Not having a will could be a major stressor for you and your family if something happens to you.
Once you pass away with no will, your estate will go through a court process named probate, which is time-consuming and expensive, not to mention stressful to your loved ones.
We wrote this post to show you the importance of knowing the difference between a will and a trust. If you are unsure which is best for your situation, read below for our basic guide on the key differences between a will vs trust.
What is a Will?
A will is a legal document that provides instructions for the distribution of your assets after your death. It is important to have a will in place to ensure that your wishes are carried out and to help avoid disputes among your heirs.
You can name an executor in your will to oversee the distribution of your assets. You can also use your will to appoint a guardian for minor children.
What is a Trust?
A trust is a legal arrangement in which one person, the trustor, gives another person, the trustee, the right to hold and use property or assets for the benefit of a third person, the beneficiary.
The trustor can be the same person as the trustee and the beneficiary.
Trusts can be either revocable or irrevocable, meaning that they can be changed or undone during your lifetime, or not.
The Difference Between a Will and a Trust
While both a will and a trust can help you protect your assets and ensure that your loved ones are taken care of after your death, there are some key differences between the two.
The Probate Process
A will goes through the probate process, which can be time-consuming and expensive. On the other hand, a trust does not go through probate.
The Effectivity Date
A will does not become effective until after the death of the person who made the will (the testator). Trust becomes effective as soon as it is created.
A will can be changed at any time by the testator. However, a trust cannot be changed once it is created, except by a court order.
Asset for Protection
A will does not provide for asset protection while a trust does.
While there are some differences between a will and a trust, it is important to remember that these two are relevant in estate planning. See more here to be guided on the estate planning process.
Learn the Difference Between a Will and a Trust Today
A will and a trust serve different purposes, but both can be useful to protect your assets. A will is a document that outlines how you want your property to be distributed after you die, and it must be filed with the court.
Wondering which is right for you? It depends on your unique circumstances and what your goals are. Make sure to learn about the difference between a will and a trust today and be prepared for the future.