The Difference Between a Will and a Trust: A Legal Guide

Around 46% of Americans have wills, while around 54% don’t. Some people don’t because they don’t think they need them, while others don’t have them because they feel like they have plenty of time to make one.

If you’re starting to think about estate planning, you might wonder if you need a will. You might also wonder if you need a trust. One big question you might have is learning the difference between a will and a trust.

When you start planning your estate, you might benefit by reading this guide that compares a will and a trust.

The Basics of a Will

To learn the difference between a will and a trust, you might want to start by learning more about wills. A will is the shortened name for “Last Will and Testimony.”

Wills are the most popular estate planning tool that people use, and they can be very simple or very complex. When writing a will, you should consider hiring an attorney. An attorney will ensure that you create a valid one.

The attorney can also help you determine what to include and its purpose. A will serves one main purpose: to provide instructions to your family when you pass away.

Most wills have several sections, and here are some of the primary ones you might want to include when you create your will:

Names of Your Beneficiaries

First, you get to state the names of your beneficiaries. Your beneficiaries are the people you want to give your assets to after you die.

The Assets Each Person Receives

Your will also lets you state which beneficiary receives your assets. You can list each person’s name along with the assets you want to give them.

The Person You Choose as a Guardian

When a person has young kids, they can use their will to name a person as their children’s guardian. If you name a guardian, that person takes the responsibility of raising your kids if you die while they are minors.

Your Funeral Wishes

You also can use your will to state your funeral wishes. For example, you can state whether you prefer cremation or burial, and you can include details about your funeral that you want your family to follow.

The Person You Name as Your Executor

Finally, you can name a person as the executor of your will. The executor becomes responsible for carrying out your wishes that you included in your will.

The Basics of a Trust

A trust is also an estate planning tool, but it serves a completely different purpose. Trusts also come in different types, and a probate attorney can help you select the right type.

The basic role a trust serves is to hold your assets. When you create a trust, you create an entity of sorts. You then place your assets in the trust by naming them on your trust.

Naming your assets on your trust basically transfers ownership rights of your assets from you to the trust. The purpose of this is to make transferring your assets to your beneficiaries easier after your death.

When you die with a trust, your family can avoid going through probate court, which is a big difference from a will. When you leave a will, your family must go to probate court.

Probate law determines the validity of a will and is a legal process that families use to transfer assets from a deceased individual to the person’s beneficiaries.

The downside to probate court is the costs. First, it costs a lot of money to go through probate. The second downside is the time it takes.

If you want to simplify your family’s work when you pass away, you might want to use a trust. It’s important, though, to learn the various types of trusts you can choose. Here are a few of the different types:

Revocable Trust

A revocable trust is one of the most common types of trusts that people use. When you create a revocable trust, you can change it anytime you wish while you are alive. Once you die, nothing can change in it.

Irrevocable Trust

An irrevocable trust, on the other hand, is a trust you can’t change. Once you create it, you can’t change anything in it.

Special Needs Trust

If you have a special needs child, you might want to create a special needs trust. This trust would specifically protect the child you name.

There are numerous other types of trusts, too, that you can use in your estate plan.

How to Know Which Tools You Need

Now that you can see the main differences between these two estate planning tools, you might wonder which one you should use. The good news is that you can use one or the other, or both.

Some people might only need a will, while others might prefer a trust. Hiring a lawyer is the best place to begin when you have questions about estate planning tools.

When you hire an estate planning lawyer, you can ask them for advice. The lawyer might ask you a few questions to determine what advice to offer.

For example, the lawyer might ask about your assets. They might also ask about your goals. A lawyer needs as much information as possible to provide you with the best advice.

In most cases, people benefit from choosing a will and a trust, as each serves a different role. A will provides more room to state your wishes, while a trust provides more protection for your family.

Learning the Difference Between a Will and a Trust Helps You Plan Properly

When you learn the difference between a will and a trust, you can determine which tools you need. Learning more about estate planning helps you plan your future properly.

If you enjoyed learning about estate planning tools, you might enjoy other legal articles on our blog. Check it out today to learn more!

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