The Three Major Differences Between a Trust and a Will
Wills and trusts are a huge part of estate planning. It is your decision if you want a will or trust. If you choose to have both, you can create your will and trust at different times in your life.
Below are the differences between the two and the importance of each.
The purpose of a will is to avoid your state's probate (default) rules concerning the property you leave on this earth after you transition. Probate rules are strict, yet efficient and apply to the nameless, faceless general population who don't leave behind a will or an estate plan. In probate, the law will make assumptions about what you want to happen to your property after death. For example, the law assumes that your children over the age of 18 are perfectly capable of handling large sums of money, that you get along with all of your family members, and that no one will fight over your assets. Usually, this is not the case. Therefore, it is important to include in your will who will have ownership of your what property once you have passed away.
If you don't want to hire an attorney, you can handwrite your own will - known as a holographic will. Whichever option you choose, a will still has age, intent, capacity, and signature requirements that you must meet for your will to be valid. Also, note that only some states will accept a holographic will that isn't witnessed by anyone else. (Check your state's rules for more information.)
A trust is created when you (through a written document) give property to another person (trustee) to hold for the benefit of a third person (beneficiary). A trust is a legal way to maintain and protect your assets for the future.
Currently, trusts aren't widely used by everyone, typically because of the stigma that trusts are only for the rich. However, more people are beginning to use them to avoid probate. If you own a home, have children, and want to control your wealth and legacy for generations, then creating a trust will benefit you in the long term.
Three (3) Major Differences Between a Trust and a Will
1. A trust is active once you sign the document and continues for decades. A will is only activated after you pass away.
2. Trusts allow you and your family to avoid probate court intervention and the fees that come with the probate process.
3. Wills can take longer to transfer assets. Yet, a trust usually avoids probate, and your beneficiaries may gain access to these assets much faster.