Death isn’t something anyone wants to think about, but when your time comes, you need to think about the impact it will have on your loved ones. This is why you need to be prepared to have a wills and probate solicitor or an estate planning solicitor that can support your decisions when the time comes. Especially during these times of uncertainty, producing a document that is triggered upon when you pass on might be more important than ever to protect your family and your assets. But, what is the best way to go about your estate planning? It’s time to clarify the differences between Wills and Trusts.
Topics to be answered in this article
What is a Will?
A Will is a legal document stating what you would like to be done with your assets after you die, as well as how you may want any affairs handled. It comes into effect after your death and your Executors have to follow the instructions stated in the Will and distribute your assets to whoever you have chosen them to go to.
Want to learn more about a Will? Read our article on What is a Will
Related: Learn how Goughs Solicitors can help you make a new Will or amend a Will
What is a Trust?
A Trust is a legal arrangement where an individual can give assets to someone else so they can look after them for the benefit of a third person. A Trusts can be created before the death of the individual, a lifetime trust. Or by including one in their Will, a Will Trust. A Trust will involve –
- a ‘Settlor’ – the person who puts assets into a trust
- a ‘Trustee’ – the person or people who manage the trust
- a ‘Beneficiary’ – the person or people who benefit from the trust
Essentially, a Settlor can put assets into a Trust where the Trustees manage the Trust assets in accordance with the Settlors wishes which are set out in the Trust deed.
By putting assets into a Trust, the Settlor no longer own them as they now belong to the Trust. There could be various estate planning advantages to putting assets into a Trust, whether this be though a lifetime Trust or by include a Trust in a Will.
There are actually a number of different types of Trusts for different situations which could involve other tax implications, so it is always recommended to receive legal advice when involved in a Trust.
What are the main differences?
Wills:
- Comes into effect after death
- Details the distribution of everything in your estate, everything that is the person’s property
- Includes details of assets, beneficiaries and children’s guardians
Trusts:
- Can be created during lifetime or on death
- Assets are managed by the Trustees
- Only covers assets stated in Trust deed
- Useful estate planning tool
- Sometimes the settlor can still access the assets until death (Settlor interested Trust)
Which option is right for you?
Yes, you can, and more often than not when they are both used, they will have some sort of effect on each other. For example, you can include elements of a Trust in a will.
The main thing to keep in mind is that if you end up having both forms of legal estate planning, then it must be well-organised and clearly state who the beneficiaries are of every Trust and asset.
In any situation where you have both and one contradicts the other or creates some sort of dispute, then the lifetime Trust will always take precedence over the Will. With both types of estate planning being legal documents, you’ll want the best solicitors to offer their help and advice when creating the official documentation before having it signed and sealed. Whether you need a Will or trust, we can help.
Can you have a Will and a Trust?
Yes, you can, and more often than not when they are both used, they will have some sort of affect on each other. For example, you can include elements of a trust in a will. A will may say that certain assets should go into a trust which only the trustees listed will be the beneficiaries of it.
The main thing to keep in mind is any potential overlaps when navigating a tricky road like this. Where possible, you’ll want to avoid disputes that may cost your loved ones. So it is vital that if you end up having both forms of legal estate planning, then it must be well-organised and clearly state who the beneficiaries are of every trust and asset.
In any situation where you have both and one contradicts the other or creates some sort of dispute, then the trust will always take precedence over the will. With both types of estate planning being legal documents, you’ll want the best solicitors to offer their help and advice when creating the official documentation before having it signed and sealed. Whether you need a will or trust, we can help.
