Did you know that 60 percent of Americans lack a will or any type of estate planning?
In part that’s because of a lack of understanding about different types of estate planning. If you’re wondering about the differences between a will v trust, you’re in the right place!
Both can help you protect your assets and ensure they are left to the right individuals. Keep reading to learn what you need to know about wills vs trusts and the major differences between the two.
What Is A Will?
A will is a legal document that states how you want your assets distributed after your death. It is considered the best-recognized estate planning document and makes up the foundation of your entire estate plan. The creator of the will names an executor who carries out their wishes as defined in the will.
A will should include things like a list of assets and debts, guardianship of minors, contents of safe deposit boxes, property, and vehicles. Possessions can be left to heirs, friends, or charities.
There are several types of wills including testamentary, joint or mirror, handwritten, and living wills. Talk to your estate planning lawyer to figure out which type is the best choice for you.
What Is a Trust?
A trust is another type of estate transfer. It creates a fiduciary relationship where the creator of the trust is able to hold assets for themselves or for a beneficiary. They can select a trustee to manage the trust if they become unable to do so or pass away.
A trust gives the creator control and the ability to outline specific rules and conditions for how assets should be distributed. For example, parents can designate that children be able to inherit income only at a certain age.
There are several types of trusts. The two most common types are testamentary trusts and revocable living trusts.
Will vs Trust: Major Differences
Wills and trusts are both important pieces of estate planning, but they have a few major differences. A trust is activated when the creator signs it, but a will only goes into effect once the creator dies. A will is the only place to name guardianship of minor children or share any funeral requests.
Upon death, a will must go through probate court. This can be a timely and costly process. Additionally, any probated will becomes part of the public record. That means anyone can look at the details of your will. A trust does not have to undergo that step and your assets can be immediately transferred to your beneficiaries.
A will is usually created through a cheap and simple process. A trust is often an expensive and complex legal document. Although wills and trusts are both legal documents, wills are more likely to be successfully challenged.
What Is Right for You?
When it comes to estate planning, understanding differences of will vs trust will help you determine what is best for you. Most people need a will, but not everyone requires a trust.
If you aren’t sure, consulting with an estate planning lawyer is a great way to work on achieving your estate planning goals. If you’re in need of a Pennsylvania lawyer, contact us at Monastra & Grater, LLC. Our team of experienced lawyers is here to help you with all your estate planning needs.