Some of you out there will know about those words, some will have heard of them and others will have not, and for those of you who are unaware of what they are about, let’s take a closer a look at just what wills and trusts are all about. Wills and trusts both provide a means for the allocation of estate assets when somebody has died, but there are some differences between them.
Some main distinctions involve if they are accountable to probate proceedings, if they will be turned into public record, and their tax treatment. Differences exist also in the managing of any assets that are transferred by a will or trust. Plus, a will is normally cheaper to ready than a trust. Although, a will can be more expensive to probate whilst a trust commonly allows beneficiaries to escape probate costs.
Transfers and Agreements
- Along with estate laws, a will is a legally binding document that provides a person to award his or her assets to designated beneficiaries.
- The will usually takes effect only after someone has died, and the distribution of assets is usually managed by a will executor.
- If you are looking for probate lawyers in London, make sure that you consult with experienced professionals.
- However, a trust can take effect during someone’s lifetime.
- With a trust, a trustor practically always transfers assets to a trustee to take care of for the benefit of the beneficiaries.
Other differences between wills and trusts is how they are administered after a creator dies.
- Wills have to go through probate, which means that a court will have to decide if the will is valid and then supervise the allocation of assets.
- This process can be expensive due to assets being more than often subject to estate taxes and skilled services of a lawyer are usually required.
- However, with a trust, probate is averted due to assets being provided during a trustor’s lifetime.
- If the trustor passes away, the trust will still function.
Wills and trusts normally get treated in a different manner when it comes to taxes.
- Usually, a trust can allow more tax advantages than a will.
- For example, the law allows for a certain amount of trust assets to be passed on to beneficiaries without demands regarding the payment of estate and gift taxes.
Asset management works in a different manner for wills and trusts.
- With a will, the power of a professional lawyer is normally offered so as to help in asset distribution.
- Whereas trusts can be managed by a trustor or trustee, depending on how the trust has been arranged. If the trustor is administering a trust, he or she will have to specify exactly who will take care of the trust after he or she has passed away.
Knowing how wills and trusts operate, is usually left to the legal professionals, so make sure one can help make it all flow smoothly for you and keep your mind at ease.