There are many similarities between wills and trusts, making it difficult to differentiate them. In Tennessee, both wills and trusts play important roles when it comes to estate planning because they allow you to name your beneficiaries, who are the people who will receive your assets after your passing.
Wills and trusts are also used to appoint trusted individuals whose responsibilities include managing and distributing your assets. Despite their commonalities, there are many major differences between the two.
Major differences between trusts and wills
Wills are legal documents that take effect after you pass away. These documents serve as guidelines for how you want your appointed executor to distribute your belongings. On the other hand, trusts are not just documents, but legal arrangements between you and another entity, allowing them to help you hold and handle your assets in life and after your death. Other major differences between trusts and wills include:
- Wills only take effect after your death, whereas trusts are in effect soon after the legal arrangement’s creation and funding.
- Wills go through the probate process. Trusts, on the other hand, are private and can bypass probate.
- Wills let you name and appoint guardians to your minor children, but trusts cannot.
- Wills require less money and effort to create than trusts.
- Trusts can manage your assets while you are alive, whereas wills are only useful to you after you die.
- Trusts manage and distribute assets. Wills can only distribute them.
Familiarizing yourself with both wills and trusts is essential if you want to start planning how to manage your assets now while you are still alive, or in the future after your passing. Both are incredibly helpful estate planning tools, especially when used together.
Why use a trust and a will together?
While wills and trusts have a lot in common, the two are not mutually exclusive. Instead, they are complementary, and you are able to use them together. Wills can handle assets beyond the trust, appoint guardians after your death and provide instructions for your executor to carry out.
Trusts, however, can help you manage assets while you are still alive and help you pass them to your beneficiaries privately without having to worry about the public probate process. Opting to use a trust and a will allows you to plan for the future and provide for your successors, helping them in life and after your passing.