Wills vs. Trusts – What are Their Differences?
Estate planning can be a difficult, stressful, and emotional process, especially if you have a large family, a complex estate, or do not fully understand the tools that are available to you. As experts in wills, estates, and trust law, the team at Linley Welwood knows that the personal and financial consequences of a neglected or poorly constructed estate can be devastating. That is why we have provided some information comparing wills vs. trusts to understand what their differences are. This comparison will help you understand what these tools are and what they are typically used for, allowing you to determine which options are best for your estate.
What is a Will?
A will is a legal document that provides instructions outlining how you want your financial and material assets to be distributed after your passing. In your will, you can appoint an executor, name beneficiaries, designate guardians for your children, and leave specific instructions detailing how and when the beneficiaries will receive their inheritance.
If an individual passes away without a will, they are deemed to be “intestate” and their estate will be distributed according to the Wills, Estates, and Succession Act. Wills are crucial for ensuring that a testator’s wishes for their estate are accurately outlined and fulfilled. In some cases, a will may need to go through probate before the executor can move forward with the instructions outlined in it. Probate is a court process that ensures a will is real and valid.
What is a Trust?
A trust is a legal relationship that binds an individual to deal with or hold property, money, or other assets for beneficiaries until they can be distributed to them. With trusts, it is important to understand the roles of everyone involved in the process. The creator of the trust is commonly referred to as the settlor, the person who holds and controls the property is called the trustee, and the individuals the property is being held for are the beneficiaries.
A trust can be created by a written document (express trust) or by an implication (implied trust). In estate planning, trusts may be created in a person’s will (a “testamentary trust”) or during a person’s lifetime (“inter vivos trusts). It is common for a will to contain some testamentary trusts, such as a trust for minor children. Inter vivos trusts can be used as a strategic wills alternative in certain circumstances. Learn about when and why a trust may be useful.
Every trust should have the following elements:
- A clear intention to create a trust and a sound state of mind for the settlor
- Clear identification of the property or subject matter to be held by the trustee
- Clear identification of the beneficiaries
Complete clarity and transparency are crucial for trusts as leaving anything up to interpretation can drastically increase the risk of a trust dispute.
To learn more about wills and trusts or to inquire about our services, get in touch with the team at Linley Welwood. We can be reached through our online contact form and will be happy to answer any questions you may have regarding our services or your will.