Wills Vs. Trusts: A Quick Reference Guide
Are you unsure about the distinctions between wills and trusts? If that’s the case, you’re not alone. While it’s always a good idea to consult specialists like us, it’s also crucial to know the fundamentals. Here’s a quick and easy guide to help you out:
Wills Can’t Do What Revocable Living Trusts Can
Avoid a conservatorship and guardianship
If you become incapacitated and unable to handle your own affairs, a revocable living trust permits you to choose your spouse, partner, child, or other trusted person to manage your assets. Wills only take effect after you die, so they’re ineffective for avoiding conservatorship or guardianship proceedings while you’re still alive.
Bypass probate
A revocable living trust’s assets are not subject to probate. Probate is required for property that is passed by a will. The probate process, which is intended to close a person’s affairs once all outstanding obligations are paid, is open to the public and can be costly and time-consuming, taking years to complete.
Maintain privacy after death
After death, maintain your privacy. Wills and trusts are both public documents, but trusts are not. If you have a will, anyone can find out the specifics of your inheritance, including nosy neighbors, predators, and dishonest “charities.” After you die, trusts allow you to keep your family’s privacy. Inheritance funding company is ready to resolve your wills and trusts-related issues.
Protect you from court challenges
Defend yourself from legal challenges. Although wills and trusts are both challenged in court, contesting a trust is often more difficult than attacking a will since trust stipulations aren’t made public.
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Wills Have Powers That Revocable Living Trusts Do Not
Name guardians for children
Only a will, not a living trust or any other sort of legal document, can name guardians for minor children. The good news is that your living trust includes a Pour-Over Will, which lets you name guardians for your minor children.
Specify an executor or personal representative
Wills allow you to select an executor or personal representative, who will be in charge of settling your estate when you pass away. Working with the probate court, preserving assets, paying your debts, and distributing what’s left to beneficiaries are usual tasks. This function is not useful if you have no assets in your probate estate (because you have a fully funded revocable trust). You can also name a Successor Trustee in your revocable living trust to act in a similar capacity after your death.
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What Both Wills & Trusts Can Do:
Allow revisions to your document
As long as you have the legal power to execute them, both wills and trusts can be amended if your intentions or circumstances change.
WARNING: Irrevocable trusts exist, and they cannot be modified without legal intervention.
Name beneficiaries
Wills and trusts are both mechanisms for naming beneficiaries for your assets. Keep in mind that wills are only used to define assets and declare who receives what, and that wills only apply to assets in your name. While trusts function similarly, you must go one step further and “finance” the trust by “transferring” the property into the trust. Your trust will only have power over assets that are held in its name.
Provide asset protection
Protective sub-trusts are built inside trusts and, less typically, wills to give your beneficiaries access to their assets while keeping them safe from creditors including divorcing spouses, automobile accident litigants, bankruptcy trustees, and business failure.
