Wills and Trusts
Wills and trusts are both useful estate planning tools. The terms are often confused, but they are distinct things that serve different purposes. Mostly, they let you take stock of your property and possessions so you can decide what to do with them.
The key difference between a will and a trust is a trust is enacted immediately while a will comes into effect upon your death. Which one of these estate planning tools suits you best comes down to your personal situation and concerns. However, when it comes to caring for your loved ones, both are essential.
Wills
A will is a legal document that sets out your final wishes. It provides instructions for who you want to receive what you own when you die, and what you want them to receive. A will also details your wishes for the care of minor children.
Why You Need a Will
- To decide how your estate will be distributed, ensuring assets remain with beneficiaries.
- To choose guardians for children under the age of 18; otherwise, the state will do it for you.
- To avoid a long drawn out probate process.
- To minimise estate taxes.
- You can disinherit individuals who might otherwise inherit if you die without a will. For example, to rule out an ex-spouse following an acrimonious divorce.
Consequences of Not Leaving a Will
Whether or not you write a will is down to you, but if you die without one, the state will step in and decide what happens to your estate. This could cause a lot of stress and heartache to those you leave behind. If you have children under the age of 18, they will be taken into the care of social services who will determine where they live.
When a person dies without leaving a valid will, they are said to have died intestate, and their property, money and possessions are divided up according to a set of rules. You have no control over your assets. The (intestacy rules) are set out in the Inheritance and Trustees' Power Act and determine who gets what. Only married or civil partners and a handful of close relatives can inherit under the rules of intestacy. The estate is allocated to family members in a strict order and does not take into account the closeness of the relationships or who may be in need.
Trusts
A trust is a magnificent estate planning tool, a legal document that allows you to transfer parts or all of your assets to specific people known as beneficiaries. Control of the trust is maintained by persons you appoint as trustees who will make sure your wishes are carried out. There are many different types of trusts, including living trusts that let you benefit from assets placed into the trust during your lifetime. These are transferred to designated beneficiaries upon your death.
Why You Need a Trust
- You avoid probate, which can mean substantial savings in time and legal fees.
- To reduce estate taxes.
- To minimise conflict between heirs over how an estate is settled.
- To make gifts to individuals and organisations.
- To plan for incapacity. This allows you to keep control even when you are unable to handle your affairs.
- To maintain privacy. Trusts are more private than wills because they don't go through the probate process. Probate files are public documents.
Wills and trusts are both useful estate planning tools. The terms are often confused, but they are distinct things that serve different purposes. Mostly, they let you take stock of your property and possessions so you can decide what to do with them.
The key difference between a will and a trust is a trust is enacted immediately while a will comes into effect upon your death. Which one of these estate planning tools suits you best comes down to your personal situation and concerns. However, when it comes to caring for your loved ones, both are essential.
Wills
A will is a legal document that sets out your final wishes. It provides instructions for who you want to receive what you own when you die, and what you want them to receive. A will also details your wishes for the care of minor children.
Why You Need a Will
- To decide how your estate will be distributed, ensuring assets remain with beneficiaries.
- To choose guardians for children under the age of 18; otherwise, the state will do it for you.
- To avoid a long drawn out probate process.
- To minimise estate taxes.
- You can disinherit individuals who might otherwise inherit if you die without a will. For example, to rule out an ex-spouse following an acrimonious divorce.
Consequences of Not Leaving a Will
Whether or not you write a will is down to you, but if you die without one, the state will step in and decide what happens to your estate. This could cause a lot of stress and heartache to those you leave behind. If you have children under the age of 18, they will be taken into the care of social services who will determine where they live.
When a person dies without leaving a valid will, they are said to have died intestate, and their property, money and possessions are divided up according to a set of rules. You have no control over your assets. The (intestacy rules) are set out in the Inheritance and Trustees' Power Act and determine who gets what. Only married or civil partners and a handful of close relatives can inherit under the rules of intestacy. The estate is allocated to family members in a strict order and does not take into account the closeness of the relationships or who may be in need.
Trusts
A trust is a magnificent estate planning tool, a legal document that allows you to transfer parts or all of your assets to specific people known as beneficiaries. Control of the trust is maintained by persons you appoint as trustees who will make sure your wishes are carried out. There are many different types of trusts, including living trusts that let you benefit from assets placed into the trust during your lifetime. These are transferred to designated beneficiaries upon your death.
Why You Need a Trust
- You avoid probate, which can mean substantial savings in time and legal fees.
- To reduce estate taxes.
- To minimise conflict between heirs over how an estate is settled.
- To make gifts to individuals and organisations.
- To plan for incapacity. This allows you to keep control even when you are unable to handle your affairs.
- To maintain privacy. Trusts are more private than wills because they don't go through the probate process. Probate files are public documents.
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