WILL OR TRUST

Wills and trusts are ideal tools for estate planning. They provide avenues for protecting and distribution of assets of an individual.

Essentially, a will is a legal document that spells out how a person wants their affairs handled and assets distributed after they die. On the other hand, a trust is a fiduciary relationship in which a settlor gives a trustee the right to hold title to property or assets for the benefit of a third party or beneficiary.

A will expresses the wishes of a deceased person including naming guardians of minor children, distribution of assets and funeral/memorial plans, aspects which trusts do not cover. A will is only activated when the testator passes on. On the other hand, a trust is effective at the point the settlor creates and funds the trust. When the trust is funded, the assets belong to the trust. A trust can also provide for property distribution after the death of a settlor. Wills have to undergo through the probate process, which is not the case with a trust. The probate process can be lengthy and at times contentious in instances where family members contest the will. This essentially saves time and resources when trusts are opted for in comparison to wills. It should be noted that in rare cases trusts can also be contested. Another important issue to note is that setting up trusts is expensive and can be complex than the process of putting up a will.

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As a will has to go through probate proceedings it entails that the deceased estate becomes part of a public record through the court proceedings. ?On the other hand, the estate under a trust remains private and passes directly to the beneficiaries, and will not incur expenses of probate litigation and court processing time.

Trusts offer more control of assets and have to be actively managed. As a will has to be interpreted by a court, it entails that the wishes of the deceased will be as interpreted by the presiding court with regards to the estate transfer. As such wills offer somewhat limited control over the distribution of assets.

There are instances, that a will can be used to create a trust. A revocable living trust sets up a transfer of property after death to beneficiaries. It is created while the property owner/ settlor is alive.? A revocable living trust can be changed at any time, similarly to wills which can be revised by the testator. While the settlor of the living trust is alive, the settlor maintains ownership of the property that is held by the trust. The property and assets in a living trust is passed?immediately and directly to the named beneficiaries.?

The decision on whether to have a trust or will is usually personal, and has to be decided upon after weighing what is in the best interest of the family and beneficiaries. Additionally, there is an option to have both, a will and a trust set up. ?A will and a living trust are two separate legal instruments. Thus, where issues arise, a living trust will most likely override a will because a trust is its own entity. Importantly, in terms of estate planning it is ideal to have a will and/or a trust than none at all, to avoid intestate.