The Difference Between a Will and a Trust
How do you decide whether a Will or a Trust is best for your family? To make that decisions, you will need to understand the difference between a Will and a Trust.
A Will is the document through which you dispose of all of your personal property. This includes personal property such as your car, your house, your bank accounts, and any other property owned under your personal name. In your Will, you can also name the legal guardian and/or conservator for your minor children.
A trust is a completely different legal document. Think of it as a holding device or a big pot in which you can add your property. For example you can put into your trust your vehicle, your home, and any other personal property you own. You can put your life insurance policy into your trust and you might be able to add your 401k or IRA account depending on whether the company holding those accounts will allow it.
In your trust, you will also choose someone to be the trustee of the trust. This person will be in charge of your trust while you’re alive (depending on the type of trust you are creating) and will distribute your property according to your directions in the trust when you pass away.
The most-liked feature of the trust is that it allows you the flexibility to distribute your property slowly over time rather than distributing all of your property right when you pass away. Families like this feature specifically when they have young children that they don’t want to leave an enormous amount of money to when they pass away.
Now if you want to create a trust, keep in mind that there are many different types of trusts, therefore it’s really important that you speak with an attorney about your specific situation.
If you choose to create a trust, you will still need a Will. The Will still serves to designate who the legal guardian for your minor children will be and it still designates what happens with taxes and funeral expenses and the like when you pass away. More importantly, it is used to pour over into your trust any property you may have forgotten to add to your trust before you pass away. This is why it is called a “Pour-Over Will”.
I hope this was helpful to you and that it helps you decide whether creating a trust in addition to a pour-over Will will be best for your family. If you are ready to start your estate plan, schedule your call here.