Wills and Trusts
Wills and trusts are two of the most common tools used in estate planning. The main purpose of creating both or either is protecting one’s assets and the rights of their children, spouses or other loved ones. There are additional goals that both documents can fulfill, such as:
• Identifying beneficiaries or inheritors
• Provide instruction for end-of-life, incapacity, and funeral decisions
• Appoint guardianship for minors
However, there might be some limitations regarding what can be included in either. Comparatively, trusts are more detailed documents and are used for purposes that wills can’t fulfill. For example, trusts are used for Medicaid planning, incapacity planning, and avoiding probate and estate taxes.
• One key difference between the two is that when you’re creating a trust, your assets are transferred and then funded under the trust’s name.
• Secondly, a will is only carried out upon one’s demise, whereas, living trusts go into effect as soon as they are finalized. This means that your trust can contain instructions for the duration of your life, after your death, and for a time when you might be incapacitated. Wills are executed posthumously.
There are other technical differences between the two. For instance, trusts don’t have to undergo probate to be executed but wills do. Wills offer more leeway when it comes to forgiving debts and instruction for payment of taxes compared to trusts. On the other hand, trusts are more iron-clad and less likely to be contested than wills.
Depending on the circumstances of the testator, both wills and trusts possess unique benefits and disadvantages. Directions and guidance of an estate planning lawyer can provide necessary intervention for better decision making.
In this category, you’ll learn more about the differences between wills and trusts. You will also learn how they compare when it comes to estate planning.