Trust and wills are two important legal concepts that can often be confusing to understand. Here, we'll break down the key differences between these two concepts in order to provide a better understanding of their respective purposes.
When we talk about trusts, we're usually referring to a legal arrangement in which one person (the trustor) entrusts another person or entity with the management of a certain asset or fund. This can be done for a number of reasons, such as wanting to protect the trustor's assets from possible liabilities or ensuring that the trustee will act in accordance with the trustor's wishes.
A will, on the other hand, is a document that sets out how an individual wants their estate (property and money) distributed after they die. wills are often drafted prior to death in order to ensure that all important decisions about an individual's estate are made in advance, and they can vary widely in terms of format and content.
So what is the key difference between trust and will? The main distinction lies in the purpose of each document.
Trust: A trust is a legal device that allows one person (the trustor) to transfer property to another person (the beneficiary) without having to take ownership of the property themselves. The trustor delegates complete control over the property to the trustee, who is responsible for administering and protecting it on behalf of the beneficiary. This type of arrangement can be beneficial because it gives third parties (like family members or friends) an easy way to help someone they care about manage their financial affairs, while still keeping them anonymous.
So what is the key difference between trust and will? The main distinction lies in the purpose of each document. A trust is a legal device that allows one person (the trustor) to transfer property to another person (the beneficiary) without having to take ownership of the property themselves. The trustor delegates complete control over the property to the trustee, who is responsible for administering and protecting it on behalf of the beneficiary.
Wills, on the other hand, are a type of legal document used to dispose of one's property after death. wills are personal documents, written by the person who is making the will, and they are not automatically binding upon anyone else. wills can be revoked at any time by the maker of the will. In other words, a will is not a trust but it can act as a substitute for a trust in some situations.
Wills: A will is a formal document that establishes your intentions with regards to your estate after you die. It specifies who will receive your assets and whether you want any specific conditions (like sales or inheritances) to apply to them. Wills are typically created in order to avoid family strife after someone dies, since it can be difficult to determine who should receive property when there's more than one person interested in it. Wills are not automatically binding; they must be signed by the testator (the person making the will) and then notarized in order to take effect.
The key difference between trusts and wills is that trusts are designed to protect the assets of the trustor while wills are designed to protect the assets of the beneficiary. Additionally, wills are generally more formal than trusts and may include provisions like specifying who is allowed to make copies of the document or challenging its validity in court.