People are often confused about whether they need a will or a trust. The following list helps you to understand their differences, but you should consult an attorney to make sure that one of these devices is appropriate for your set of circumstances:
- A will covers any property that is in your name when you die. It cannot affect property held jointly or in a trust.
- A trust covers only property that has been properly titled in its name. Many trusts remain empty after their creation because the grantor fails to title his/her property in the name of the trust.
- A will has to be probated-a legal process to ensure that the will is valid, creditors are paid, and property disposed of the way the deceased wanted. A trust can be administered privately.
- A will can enable you to name a guardian for your minor children and to specify your final arrangements; a trust cannot.
- A trust can be used to plan for disability or incapacity; the will cannot.
- The will does not go into effect until death, but a trust becomes operational as soon as it is created.
- A will directs who will receive your property at death and appoints a personal representative or executor to carry out your wishes.
- A trust can be used to distribute your property before death, at death, and even beyond. While both wills and trusts have designated beneficiaries, a trust has two types of beneficiaries: one who receives income from the trust during their lives and the other receives whatever is left after those in the first category of beneficiaries dies.