Handle the distribution of your assets and protect your heirs and dependents - the people you love the most. Having sound knowledge about a Will and Trust goes a long way to achieving this.
Everyone wants to keep their family safe when they are around, and even after. Acquiring knowledge about Will and Trust can help you protect your heirs and ensure distribution of assets to beneficiaries the way you want.
Let us discuss these legalities in depth below. If you’re wondering whether a will or trust is right for you, you’re not alone. Many people are unclear about the difference between these two estate planning tools.
A will is a document that outlines your wishes for how your assets will be distributed after your death. A trust, on the other hand, is a legal entity that can hold and manage assets on your behalf.
There are several key differences between a will and trust.
First, a will comes into effect only after your death, while a trust can take effect as soon as it’s created.
Second, a will must go through probate, which is a court-supervised process for distributing assets.
This can be time-consuming and expensive. A trust, on the other hand, can avoid probate altogether.
Third, a will is public record, while a trust can remain private.
Finally, trusts offer more flexibility than wills when it comes to asset distribution. For example, you can use a trust to provide for a minor child or disabled beneficiary who may need ongoing financial support.
Keep in mind that there are many factors to consider when deciding whether a will or trust is right for you. Be sure to consult with an experienced estate planning attorney to discuss your specific situation and needs.
The Important Differences Between Will and Trust
Let us get a clear understanding of the differences between Trust and Will. Both terms relate to the division of assets, but there are differences between the two. We Will delve into the dissimilarities.
Meaning
A Will is a legal piece of document that specifies how a person’s (testator’s) assets, personal stuff, and belongings are distributed among their legal heirs after their death. It is a document that declares the testator’s desires and intentions.
Let us now take a look at what Trust is. It is a legal arrangement that protects assets and directs their use and disposition according to how the owner, also known as the Trustor or grantor, wants it. The Trustee plays the role of a guardian and holds the responsibility to distribute the assets in the designated manner among the beneficiaries.
Making a Will is relevant for families with limited assets. In the case of wealthy families, forming a Trust to distribute the assets is a better option. An individual who creates a Trust can even allocate a percentage of the money for philanthropy if they want. They can specify the monthly amount they want the family to get for their expenses.
A Trustor can even set the money children can avail for education, costs for weddings, etc. A living Trust is a legal arrangement permitting someone to give their assets to someone else while alive while keeping control of the assets until their demise.
Will and Trust: Documents
- A Will is a document that a testator makes before their death. It must mention the name, address, and age of the testator
- It lays down the testator’s wishes on paper regarding the distribution of his/her property after their death
- The testator must appoint an executor, who shall implement the Will after the testator’s demise
- The details of properties that the testator wishes to give to his beneficiaries must be mentioned
- For example, the description, the registration number, the date of registration, and whether it is his self acquired property
- In the case of movable property, the details and description of each asset should be individually mentioned clearly
- When there’s more than one beneficiary, the details of each beneficiary, like the name, address, age, and relationship of the testator with the beneficiary, need to be mentioned on the document
- What happens when the testator wants to give his property to any beneficiary who happens to be a minor? In that case, the testator should appoint a guardian who takes care of the minor’s property till the minor attains majority.
- A Trust is a legal arrangement where the Trust deed comes into play
- In this deed, the Trustor (who forms the Trust) authorizes a Trustee to manage the assets for the beneficiary/beneficiaries
- A beneficiary is a person/persons entitled to benefit from the Trust arrangement – https://legislative.gov.in/sites/default/files
For example: Mr A is a testator who forms a Will to distribute his property among his heirs and beneficiaries after his death. Mr B is a Trustor who authorizes Mr C (Trustee) to manage the assets for his beneficiary/beneficiaries.
Covers
online Will covers all the assets that come under a testator’s estate. It allows the testator to direct his belongings—such as property, bank balances, or prized possessions, to be distributed according to his wish. If you have investments or a business, you can specify who ought to receive those assets and when. In comparison, a Trust covers a particular asset/assets.
Coming Into Effect
A Will becomes effective on the demise of the testator. On the other hand, a trust registration becomes effective when the Trustee gets the transfer of the asset/assets.
Probate
Probate is the copy of a Will that is certified under the seal of a court of competent jurisdiction with a grant of administration of the testator’s estate. Probate can be granted only to the executor appointed. The testator chooses an executor. Usually, they select their civil partner/ their spouse or children as an executor.
At least one executor needs to be over 18 when they apply for probate. According to the Indian Succession Act, of 1925, when a Will is made by a Hindu, Jain, Sikh, or Buddhist within the territories of formerly unpartitioned Bengal or regions falling within the jurisdiction of High Courts of Madras or Bombay, then the process of probate is compulsory.
When it comes to a Trust, it does not undergo probate. Since there is no requirement to obtain probate for a, there won’t be any delay in the distribution of assets.
Revocation
One can revoke a Will by executing a subsequent one or by writing and declaring an intent to revoke it. They can also burn the document, tear it, or destroy it. Canceling the document by drawing lines across it is not considered a revocation mode.
The revocation of a Trust depends on the type of Trust. In the case of a revocable Trust, the Trust’s creator, also called the grantor, can revoke or amend the revocable Trust. However, when it comes to an irrevocable Trust, the grantor completely gives up their ownership rights and hence cannot revoke or make any amendment to the Trust. The Trustee manages the irrevocable Trust.
Publicised
When an executor sends a Will to the Probate Registry, it becomes public. On the other hand, a Trust is kept private Trust
Conclusion
There are several key differences between a will and a trust, which include the following:
1. A will is a document that outlines your wishes for how your assets should be distributed after your death, while a trust is an arrangement that allows someone else to hold and manage assets on your behalf.
2. With a will, your assets go through the probate process after your death, which can be time-consuming and expensive. Trusts typically avoid probate, which can save time and money.
3. Wills are public record, while trusts can be private. This means that anyone can see what you’ve left in your will, but only those who you’ve named as beneficiaries or trustees of your trust will know about the assets held in the trust.
4. Wills must be signed and witnessed, while trusts do not require any signatures.
5. Finally, trusts typically provide more flexibility than wills in terms of how and when assets are distributed to beneficiaries.
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