What is the difference between a will and a trust?
A Trust is a way of transferring your property to an artificial legal entity or “person” before your death, while still having the use and/or control of it during your lifetime. As the Trust owns legal title to the property in it at the time of your death, and the Trust does not die with you, the property does not have to go through “probate”. Probate is the legal process which inherited property goes through to transfer the title to the beneficiary. If you have a large estate, or even a small estate with real property (i.e. real estate), it is often advantageous to set up a Trust, as it usually ultimately is far less expensive. A probate lawyer can help you decided whether a Will or a trust is best for you and your estate.
The primary purpose of a will is to give directions on how your property will be distributed upon your death. Property distributed by a will requires a Probate and is distributed directly to the beneficiaries at the end of the probate. At that point, the property belongs to the beneficiary and is subject to any debts or obligations the beneficiary may have. Wills can also contain instructions regarding the care of minor children, gifts to charity, and foundations. In order for a will to be legally valid, you must sign the will in the presence of two witnesses, you must be mentally competent, and not acting under duress or under the controlling influence of another.Trusts are legal entities that can replace or supplement wills, as well as help manage property during your life. Most people set up trusts in order to avoid probate. However, it is also possible to accomplish many things with a trust that you cannot with a simple will. A trust can contain instructions regarding your wishes i
Wills and trusts are important death planning tools. When it is more important to have a trust? If only there was an easy litmus test that clients could subject themselves to, which would provide accurate, consistent and favorable choices in making a decision as to which tool to use. Unfortunately, there is no such litmus test. The reason to choose a will or a trust is individual and, generally, has nothing to do with how much property or wealth an individual might have. It has everything to do with what is the expected or hoped for outcome of what a person would like to have happen after death. Many times the choice between these tools is based on a need for a higher degree of control over a predictable outcome. For instance, a trust may be a more favorable tool to control and manage property located in more than one state so as to avoid probate in multiple states. A trust may also be preferred to manage property on behalf of loved ones who may be incapable of managing property for th
A Will and a Trust serve different purposes. Most people don`t have either one. A Will and a Trust are similar in the effect that both let you designate exactly how you want your assets and other personal property to be distributed to your friends, family and other loved ones after you die. The difference between a Will and a trust is that a Will probates through probate court, but a trust doesn`t. A Trust is administered outside of the probate court after you die. People prepare a trust to avoid paying these probate taxes. Generally, you would not need to prepare a trust to avoid probating your Will if you net assets amount to less than $1 million (This amount which is exempt from Federal Estate Tax increases to 1.5 million in 2004 and 2005, 2 million in 2006 through 2008, 3.5 million in 2009 and then in 2010 there is no federal estate tax. However in 2011 the Federal Estate Tax is returned to the 2002 level). In this case, a Will would serve the same purpose as a trust because the fe
A Trust is a way of transferring your property to an artificial legal entity or “person” before your death, while still having the use and/or control of it during your lifetime. As the Trust owns legal title to the property in it at the time of your death, and the Trust does not die with you, the property does not have to go through “probate.” Probate is the legal process which inherited property goes through to transfer the title to the beneficiary. If you have a large estate, or even a small estate with real property (i.e. real estate), it is often advantageous to set up a Trust, as it usually ultimately is far less expensive. A probate lawyer can help you decided whether a Will or a Trust is best for you and your estate.
