Wills and trusts are both estate planning tools that are well known yet not well understood. Estate planning as discussed previously is a process that aims at ensuring your assets as well as wishes are taken care of in the event of incapacitation or even death. There are many ways to plan your estate and among them; wills and trusts. In order to fully appreciate the role of each, we have to first delve into what they are, their advantages and the scenarios when both or all of them maybe needed.
Wills and Trusts Explained
A will is a legal document written that serves to express the wishes of an individual concerning the distribution of their estate in the event of their death. A will, also known as a living testament may also contain wishes with regard to the guardianship of minors and dependents as well as funeral wishes.
A trust on the other hand, is a fiduciary relationship wherein, you as the property owner or “trustor” transfers the authority to handle your assets to a third party for the benefit of your beneficiaries. There are two types of trusts, living and testamentary.
What Is the Importance of Wills and Trusts?
Both these tools serve to ensure your estate is well taken care of in the event of your death or incapacitation. Both wills and trusts will also ensure that your dependents are taken care of in these two eventualities. An advantage that is specific to trusts is that it by passes probate law allowing your dependents to save time and money upon your death.
What Are the Differences Between Wills and Trusts?
First, wills only become effective in the event of your death. Trusts on the other hand become effective as soon as they are set up. Wills, while being legally binding, still have to be authenticated by probate law while trusts bypass this process. Additionally, wills cover only the assets that are under the name of the person who draws them up, excluding jointly owned properties. Trusts, however, cover only the assets that have been named and transferred to the trust.
Do You Need Both A Trust and A Will?
This is wholly dependent on your needs and wishes. Wills may be sufficient in some cases while trusts may be more suited in certain cases. Our attorneys in Taunton, MA are more than willing to discuss your needs and offer you options that would best serve you and your dependents.