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April 1, 2022
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People use two primary estate planning documents to plan for the distribution of their assets after death: Wills and Trusts. Both have advantages and disadvantages, so it is important to understand the difference between them before making a decision.Most people are familiar with the concept of a Will – it’s a legal document that outlines how you want your assets to be distributed after you die. If you don't have a Will, your assets will be distributed according to prevailing law.
When it comes to estate planning, many people are unsure of whether a Will or a Trust is the best option for their situation. While both options can effectively handle your affairs, there are some key differences to understand before making a decision.
A Will does not go into effect until after you die, whereas a Trust is active once it is created and funded. This means that a Trust can be used to manage assets during your lifetime, which can be helpful if you become incapacitated or otherwise unable to manage your affairs, something a Will cannot do.
When a person dies, their estate must go through probate to confirm the Will and allow distribution of assets. Probate is a process that a probate court oversees, and it can be lengthy and expensive. If a person dies without a Will, the process is often even more complicated and can take longer and cost more.
The cost of preparing a Will is relatively cheap and straightforward. However, Trusts can be complex and require more paperwork to establish, so they are generally more costly to organise upfront than Wills. However, avoiding probate down the road can offset the cost of setting up a Trust.
When it comes to estate planning, a Will may be all you need – but if you have more complex financial affairs or want to take extra measures to protect your assets, a Trust could be the best solution.Be sure to consult an experienced lawyer to discuss your best options and devise a plan that will work best for you and your family.
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