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Find out which one you should use for estate planning 

Trust and will resemble each other a lot at a cursory glance. Some people find it hard to distinguish between the two entities sometimes. Though it’s valid that they are confused between the 2, it is not so hard to distinguish it. 

Difference between a trust and a will in estate planning 

Let’s establish what a trust and a will are first in estate planning. 

Difference between a trust and a will in estate planning 
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1. Trust 

A trust is a legal entity that is used to protect the assets and properties in your estates and companies. Trusts are recommended mostly for people who have significant assets in their estates. This is because these significant assets can be expensive to create and administer beyond a certain monetary limit. A trust will often cover the estate’s finances and allow the details of your finances to remain private. Even when your trust has passed beyond outside of probate, your finances will still remain private. 

When you have passed away, the trust will become the legal owner of your assets. As a matter of fact, your assets already belong to the trust as soon as you have created them. 

There are many kinds of trusts available out there. However, an irrevocable trust is the most relevant one in the world of estate planning. An irrevocable trust is one that cannot be revoked. As soon as it is created and you have put your assets in there, you cannot take it out. 

Irrevocable trusts are good for people who are looking to avoid probate and keep the asset details private. In an irrevocable trust, it allows you to make more detailed provisions on how your estate is handled. It also protects creditors and potential litigations against your assets. 

2. Wills 

Wills are usually made to instruct the trustee and the executor on how to distribute the assets, monies, and properties after you have passed away. The same thing applies in estate planning as much as it does in personal assets. 

You can name your trustees, your executors, your beneficiaries, all in your wills – be it in personal wills or even in estate wills. When you have passed away, the named trustee and/or executor can come around and administer the assets, monies, and properties accordingly. You won’t have to worry too much about what’s going to happen to your assets when you have passed away. As long as your will is legal then you have (close to) nothing to worry about. 

However, if you do not have a will, or a legal will at that, then things will get super difficult and painful for you and your next-of-kin. Your assets will go into probate, which often takes a very long time to settle before a beneficiary is named. 

Oftentimes, if you do not have a legal will and have a child out of wedlock with your partner, then you will be faced with a lot of difficulties. For one, when you have passed away, the Distribution Act/law dictates that your assets be divided and given to your immediate family. Your unmarried partner and child will not get anything out of it. They can contest it, but it will be a long and difficult battle for your unmarried partner and child. 

Which one is better for my estate then? 

Which one is better for my estate then 
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Now that we have established the basic understanding of both trust and will, your next question will be which one will suit you better

Choose a trust if you have significant assets in your estate to distribute. It’s not that a disgruntled heir will challenge your trust when you have passed away. They can challenge the trust if they are not happy with the final outcome. However, a trust is good when you have noteworthy assets to distribute. 

Choose a will if your finances are an issue for you now. Wills are generally a tad bit more affordable than a trust, but it’s still money nonetheless. However, a good thing about wills is that it’s very specific in what to distribute and to who. If any of your assets are not named in your trusts, you can list them down in your will. That way your “unlisted” properties will not go to waste. A disgruntled heir will also challenge a will if they are not happy with the outcome and results too. 

Key Takeaway 

Regardless of which one you choose to go for, both have its own benefits. Just remember to have one done and legalized before you passed away. Because when you’ve left without leaving behind a legal trust or will, you’ll create a lot of chaos for your next-of-kin.