Most of us are not oblivious to “Will” and “Trust”. These terms can often confuse a non-specialist or people who do not deal with legal jargon on a day-to-day basis. While these legal terms might sound the same, they have different purposes. Read on to know the differences between them and to determine which one you may want.
Before we get into the differences between the two, it’s essential to know that both can be extremely useful when it comes to estate planning. Furthermore, both these tools can work together to create a robust estate plan.
The Differences Between a Will and Trust
The most significant difference between a Will and Trust is that a Will is effective only after the person’s death whereas, a Trust is effective as soon as it is created.
Furthermore, a Will is a legal document that involves the appointment of a legal representative, also known as an executor or administrator, whose primary responsibility is to carry out the deceased’s wishes as instructed in the document. Additionally, a Will is a legal document that lets you decide who should receive your property after your death. The legal representative ensures the execution of the Will.
In contrast, Trust is a legal arrangement that is effective as soon as you create one. This legal device helps you with transferring your assets while you are still alive. This arrangement involves a trustee who can be a person or an institution that holds legal title to the beneficiary’s property. The beneficiary is the person to whom you are transferring your assets. A Trust has beneficiaries that belong to two different categories: beneficiaries that receive an income during their lives and beneficiaries entitled to what remains after the death of the first beneficiaries.
Another critical difference between a Will and Trust is that a Will covers property in your name at the time of your death. A Will does not cover any property held as a result of joint tenancy or in a Trust. In comparison, a Trust covers only that property under the name of the Trust. Transferring property to a trust is mandatory for this kind of cover.
Finally, a Will involves probate – simply put, it’s the process of administering the deceased’s estate. In the case of a Will, the court acts as the overseer regarding the Will’s administration. Furthermore, both the validity and fair execution of the Will come under the overseer’s purview, i.e., the court. In the case of a Trust, probate is not applicable; therefore, a court is not required to oversee the process. This saves time and money.
A trust can remain private whereas a Will is accessible as it comes under public records.
Deciding between the two depends on your requirements. For instance, if it is naming guardians for your children, then a Will is suitable. Similarly, a Will is also the right choice if you want to specify arrangements regarding your funeral. However, if you are looking for ways to plan for disability or tax minimization, a Trust could be an ideal choice. An experienced legal firm or your lawyer can best advise you regarding the usefulness of the two.
Conclusion
Both “Will” and “Trust” have their advantages and disadvantages. Seeking sound professional help regarding matters of your estate plan is advisable. It not only ensures a hassle-free settlement of your affairs but guarantees peace of mind.
Are you looking for a litigation law firm in Edmonton for legal assistance concerning Wills, Trust or estate planning? Prowse Chowne LLP is a law firm that offers legal services regarding estate planning, disputes, business litigation, corporate services, employment law, and more. Get in touch with us today to book a consultation!