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Trusts and wills: know the difference regarding your affairs

There’s a time in most people’s lives when they consider what will happen to their estate. You want the peace of mind that comes with knowing your assets and property are securely where you want them. This raises many questions, though. Is a trust the best way to leave your assets to the next generation? What about a will? How do they differ?

Trusts and wills are both useful tools for planning your estate, and do very different things in some cases. You may find that for your situation, both a will and a trust are what you need. Take a moment to consider the benefits of both.

What is a trust?

A trust is a legal entity you may set up to hold cash, property and other assets that you plan to give to someone else. As the “grantor” of the trust, it is your responsibility to add the desired asset which will be awarded to your desired beneficiary or beneficiaries.

Trusts give you a lot of control over your assets. You can decide specific layers of conditions of when and how much of the assets are dispersed. For example, you could set conditions which transfer ownership of your home to your spouse upon your death, and then transfer the home to your children upon your spouse’s death.

Trusts will also never become public record, making them particularly attractive to people who appreciate their privacy. They also, by and large, cannot be challenged in court.

What is a will?

A will is a legal document you can draft yourself or with the aid of an attorney that expresses your wishes regarding your property, guardianship for your children, how your debts and taxes should be paid, what will become of your pets and other matters.

A will is different from a trust in that there are very few legal requirements to create the document. You may choose to draft your will with an experienced attorney, but you also have the option to write one yourself based off a template.

Generally, the only requirements are that you be “of sound mind” while writing your will, have the document signed by two witnesses not receiving anything in the will, and sign it yourself. Wills do not have to be notarized. However, a self-proving affidavit, or a sworn statement signed by you and your witnesses, will make probate easier, and it must be notarized.

Wills and trusts two very different tools that can be effective in very different ways when planning your estate. While trusts tend to be more complex and will often require the help of an attorney, they provide you with considerable control of your assets. Alternatively, a will is a bit simpler.

The right estate planning tool for you will always depend on your situation, so educate yourself and make the best decision for your future.

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