During the creation of your estate plan, you will most likely run into terms like wills and trusts. In fact, many people will have both of these things in their own estate plans, because each holds a different purpose and fulfills a different goal.
So what are the differences between trusts and wills? Why should you consider having one of each?
Wills, trusts and probate
Forbes takes a look at the comparison points between wills and trusts. First of all, wills do not take effect until after your death. On the other hand, unless you have a testamentary trust, the trust will likely take effect right away.
Trusts also do not have to go through probate, unlike wills. In other words, you can pass a trust directly on to your beneficiaries, while keeping the estate plan itself private. Life insurance policies and retirement accounts also allow you to pass by probate via beneficiary designation. This saves your beneficiaries time, effort and stress.
Revocable and irrevocable trusts
Trusts can also be revocable or irrevocable, i.e. you can change revocable trusts and you cannot change irrevocable ones. Though irrevocable trusts allow for more protections, many people enjoy the flexibility that a revocable trust gives. You can change or alter them at any time, or even terminate them.
A will tends to act as a more comprehensive roadmap of what you want to be done after your passing, however. Again, most people will use both together because they fulfill different needs and purposes. You can discuss your estate plan with legal help to determine which combination will suit your needs the best.