What are the basic differences between a Will and Trust?
– Authored by: Michael L. Rutkowski
The two most basic estate planning tools are Wills and Trusts. Many people do not understand the differences between these two tools, and in this short article, I hope to clarify some of the key differences for you.
As mentioned in our post earlier this month, a Will is a basic document that gives you the ability to say who gets your assets upon your death and who will make sure that what you have instructed actually happens. Some of the problems with utilizing a Will include that a Will is fairly easy to contest, it still requires probate court involvement, and it is a public document for anyone to view, as it is recorded with the probate court. A trust avoids these pitfalls.
A revocable living trust is created during an individual’s lifetime and is “funded” with an individual’s assets. (We will discuss the concept of “funding” in later posts.) Once funded, a trust provides much greater control of an individual’s assets and provides the following benefits:
- Assets transfer outside of probate
- Greater control and flexibility
- Substantial increase in privacy
- Asset protection
In the coming weeks, we will discuss each of the above-mentioned benefits in greater detail, which will enhance your understanding of the differences between a Will and a Trust and give you the knowledge needed to make the best planning decisions for yourself and your family.