A will and a trust are both estate planning tools, but they serve different purposes and have some key differences.
A will is a legal document that outlines how a person’s assets will be distributed after their death. It allows a person to name beneficiaries for their assets and appoint an executor to manage their estate. A will only takes effect after the person’s death and must go through probate, a court-supervised process to validate the will and distribute assets. A will can also name guardians for minor children and establish trusts for their care.
A trust, on the other hand, is a legal entity that holds assets for the benefit of named beneficiaries. A trust can be established during a person’s lifetime or in their will, and it can take effect immediately or after the person’s death. A trust can provide greater flexibility and control over the distribution of assets, as well as potential tax benefits. Unlike a will, a trust does not need to go through probate to distribute assets.
One advantage of a trust over a will is that it can provide for the management of assets during a person’s lifetime, as well as after their death. This can be especially useful if the person becomes incapacitated or is otherwise unable to manage their assets. Additionally, a trust can offer greater privacy, as it is not a matter of public record like a will that goes through probate.
Both wills and trusts can be important estate planning tools, and the decision of which to use will depend on an individual’s specific needs and goals.