In 2021, 46% of American adults had wills. This number needs to be much higher, as leaving loved ones behind can be a sudden and unexpected event. You don’t want them to have to sort out your finances and assets while grieving, after all.
Because you want to get all your ducks in a row before something happens, you’re now interested in creating a will. But did you know that in addition to wills, there are also trusts?
When it comes to a will vs. trust, what’s the difference anyway? Read on to find out.
What Is a Will?
A will is a legal document that you put together to name someone (or multiple people) or receive your assets upon your death. This includes things like property and family heirlooms.
Types of wills include simple/testamentary, joint/mirror, handwritten/holographic, oral/nuncupative, pour-over, and living.
In a will, you’ll also name your executors and personal representatives; the former are the people who are responsible for overlooking the distribution of your property.
A will only goes into effect after your death.
What Is a Trust?
A trust is considered a legal entity that holds all your assets. You can name a trustee, who will manage and safeguard your trust property for your named beneficiaries after your death.
Types of trusts include living, testamentary, revocable (living), irrevocable, and charitable.
A trust goes into effect as soon as it’s signed and funded.
Will vs. Trust: Similarities
Both wills and trusts determine how your assets will be distributed after your death. In addition, you’ll have to name people to carry out your wishes specified in these documents.
However, this is where the similarities end.
Will vs. Trust: Differences
The first difference you’ve probably already noticed is that a will only goes into effect after you die, while a trust is active as soon as it’s created. As a result, not only can a trust protect you and your loved ones after your death, but also if you become mentally incapacitated.
While a trust offers more protection because of the above, it’s a more complex process, which means it’s more expensive.
You can update a trust throughout your life, while a will is set in stone when you create it. This means trusts hold more water and wills are more easily challenged, especially if they’re created a while ago.
No matter which you choose, you’ll want to hire a lawyer to help with estate planning and other legal issues surrounding wills and trusts. This can ensure your will or trust is airtight.
Make Sure Your Affairs Are in Order
Now that you know the difference between will vs. trust, you’ll be able to make the best decision for how your assets are divided when you die. Not only does this provide peace of mind for you, but it also creates security for your loved ones.
So don’t wait another moment. Hire an attorney and get your affairs in order before anything happens.
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