Will vs. Trust: What’s the Difference?
Will vs. Trust: What’s the Difference?
Both transfer an estate to heirs, but only a trust can skip probate court
By Matthew Jarrell Updated May 17, 2022
Reviewed By Ebony Howard Fact Checked By Amanda Jackson
Wills vs. Trusts: An Overview
Trusts are legal arrangements that protect assets and direct their use and disposition in accordance with their owners’ intentions. While wills take effect upon death, trusts may be used both during the life and after the death of their creators. Separately or together, wills and trusts can serve effective estate planning.1
This article will examine how these estate-planning tools can provide for your heirs, including:
The need for a will, a trust, or both
The different types of trusts
The advantages and disadvantages of wills and trusts
KEY TAKEAWAYS
When creating a will or a trust, you should consult tax, investment, and legal advisors.
A will is a legal document that spells out how you want your affairs handled and assets distributed after you die.
A trust is a fiduciary arrangement whereby a grantor (also called a trustor) gives a trustee the right to hold and manage assets for the benefit of a specific purpose or person.
Trusts can have a limited term, the duration of the grantor’s or another person’s lifetime, and can hold assets and distribute them after the grantor’s or other person’s death.
If you die intestate (i.e., without a will) and have made no other estate planning provisions, the distribution of your assets will be determined by state law.
Wills
A will is a document that directs the distribution of your assets after your death to your designated heirs and beneficiaries. It also can include your instructions for matters that require decisions after your death, such as the appointment of an executor of the will and guardians for minor children, or directions for your funeral and burial.
A will can direct an executor to create a trust and appoint a trustee to hold assets for the benefit of particular persons, for example, for minor children until they reach majority or a specified age.
A will must be signed and witnessed as required by state law. Its implementation requires a legal process. It must be filed with the probate court in your jurisdiction and carried out by your designated executor. The document is publicly available in the records of the probate court which oversees its execution and has jurisdiction over any disputes.
Trusts
Trusts are legal arrangements that provide for the transfer of assets from their owner, called the grantor or trustor, to a trustee. They set the terms for the trustee’s management of the assets, for distributions to one or more designated beneficiaries, and for the ultimate disposition of the assets. The trustee is a fiduciary obligated to handle the trust assets in accordance with the terms of the trust document and solely in the best interests of the beneficiaries.
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