WILLS vs. TRUSTS: IN PLAIN ENGLISH
It recently occurred to me that I spend time sending out these emails and I appreciate those of you who actually open and read them. But, given the number of clients who begin consultations asking, "So, how is a Will different from a Trust?", I thought it might be helpful to answer that question here, in plain English.
Almost everyone has heard of wills and trusts. Most articles written on these topics, however, often presume everyone knows the basics of these important documents. In reality, many of us do not – and with good reason – as they are rooted in complicated, centuries-old law, from another continent in some cases. In fact, even in law school, the distinction is not really made clear. Let us face it, if you are not an estate planning attorney, these concepts tend to remain merely that – concepts. So, if you are “fuzzy” about wills and trusts, know that you are not alone. After we show you the difference between these two documents, we will tell you why a trust is often the better choice.
Wills vs. Trusts: Defined
Let us take a minute and define both “will” and “trust”:
Will - A will is a written document that is signed and witnessed. A will is considered a "death" document as it only goes into effect when you die.
provides for the distribution of assets owned by you, but not assets directed to others through beneficiary designations (e.g., life insurance or retirement benefits)
sends assets in your individual name or payable to your estate through the probate process
allows you to appoint permanent guardians for your minor children
names the person you wish to settle your estate (e.g., executor or personal representative)
does not always include protective trusts for beneficiaries and tax planning because many wills are simple 2-3 page documents