Most of us have heard of «wills» and «trusts» as useful ways to plan our estate. But what’s the difference between them?
A will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. One major difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect when you create it.
A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a «trustee,» holds legal title to property for another person, called a «beneficiary.» With a trust property can be distributed before, at or after death.
One major benefit of having a trust is that it keeps your estate out of probate, the legal process that inventories and distributes a person’s property after their death. Probate can be expensive and time consuming. However, trusts take more time and cost more to prepare than a will.
Wills can be done with or without an attorney. There are several do-it-yourself software kits available. Trusts require an attorney. If you have any questions about which is best for you, it’s a good idea to consult an estate planning attorney.
Whichever option you choose, it’s ALWAYS good to plan ahead.