At some point in our life, we know we should make a plan for what happens to our assets once we pass. In short, it is important to make sure everything is distributed correctly and in a reasonable amount of time. The two most common ways to accomplish this are by setting up either a will or a trust. So, what is the difference between the two?
What’s a Will?
A will (also called a last will and testament) is a written document that lists how property and assets are to be distributed at the time of one’s death. In order to be valid, a will must be signed and witnessed. Wills can be canceled or amended at any point during one’s life. Wills can also include a guardian(s) if one has children under the age of 18. Wills are typically less expensive than trusts.
What’s a Trust?
A trust (also called a living trust) offers management of one’s property and assets during life as well as after death. A trust requires more upfront work and is usually more expensive than a will because a trust has to be managed after it is been set up. A trust only controls assets that are put into the trust. If an individual serves as his/her own trustee, a trust instrument will list a successor trustee, in the event that the trustee becomes incapacitated or dies. Also, if the individual who sets up the trust becomes disabled, the successor(s) can manage the trust property.v