A trust is a fiduciary agreement that makes it possible for a third party (the trustee) to retain assets on behalf of a beneficiary.
Most people are confused about the difference between wills and trusts. It can be difficult for someone to fathom their own deaths, and to make it more difficult, their property post death. But, as this is an exercise that should be undertaken by everyone here we will discuss the basic differences between Wills and Trusts.
What is a Trust?
A trust is basically wealth management during life. It allows it’s progenitor to pool his/her wealth in a corpus, wherein all his property would be laid out under a property management fund. Such a fund usually isn’t subject to probation, or judicial scrutiny, as is the case with a will. This prevents the inconveniences and expenses of court-supervised distribution of one’s wealth.
A living trust could be revocable and irrevocable. Though, revocable is preferred over the latter, as it provides for modifications and amendments to the trust, there is no such guarantee under the irrevocable fund, which is set in stone. Under the irrevocable fund, when a trustee for the trust is decided, it can’t be changed, under no circumstances whatsoever.
Which Is Better?
It depends on personal choice and preferences, as there are many benefits entailing wills and living trusts. Some have been elucidated below, for easier comparison. It is also important to notice that some states have made a written will compulsory, in an attempt to limit creditor’s claims.
To Avoid Probate and Ascertain Privacy.
As a living trust is beyond judicial scrutiny, the user’s wishes post-death won’t be put out in the open. He or she gets to maintain privacy and they don’t have to get involved in the hassles related to judicial probates, like expenses, time lost, and undue questioning.
When a Person Plans for Mental Disability.
When planning for mental disability, trusts are known to be more beneficial as compared to wills. As the successor trustee may then take command of the trust, in the case of the primary trustee becoming mentally incapacitated. Also, the trust documents may carry all the information to declare the primary trustee mentally incompetent – this is done to prevent any unscrupulous activity.
Wills also command their own advantages. At the onset, a trust is basically an empty vassal, without any substantial property held to it, till such a property is added. In such a case, if any property is left out, then that property would be liable to go through judicial scrutiny. A will provides for a proper commingling of all the properties under one’s possession. There is no scope of discrepancy in a will, as everything is done under close scrutiny, and also under judicial probate.
In the case of any discrepancy, the fine lettering of the will holds supreme. This ensures that the user’s family doesn’t experience any excessive legal hassles to claim what is rightfully theirs.