Both wills and trusts are essential estate planning documents that protect your family and financial interests. Although the terms are often used interchangeably, there are some notable differences between the two. If you’re unsure whether you need to draft a will or a trust—or both—the Law Office of Jim Snow in High Point, NC, will help you navigate your options. Below, the attorneys discuss the purpose of each document and how they differ.
Creating a Will
A will is the most basic estate planning document, and everyone should have one regardless of their financial situation. Often called a last will and testament, it does not go into effect until after you die.
In your will, you can distribute assets to your beneficiaries, establish guardianship for your children, and express any wishes you have regarding your funeral service. Although your will is legally binding, you can update it at any time to reflect changes in your life circumstances. When you do pass, your assets will have to go through the probate process before your beneficiaries can claim them.
Establishing a Trust
Much like a will, you can use a trust to transfer assets to your beneficiaries. However, there are several differences between these two estate planning documents that can impact your decision about which one is right for you. Most notably, a trust goes into effect as soon as you create it, and the assets you distribute through it do not need to go through the probate process upon your death.
Additionally, the assets you can leave in a trust are different from those you can bequeath in a will. You can only include assets that are in your name in a will. In a trust, you can include assets that pass directly to a beneficiary by law, like life insurance policies and joint tenancies with survivorship rights. It is important to understand the terms of your trust because, in general, this document cannot be updated or revoked like a will. Although there are revocable trusts, they do not offer the same financial benefits and protections as an irrevocable one.
When it comes to taking care of your family, it’s important to plan for every possibility. Whether you need to update your will or establish a trust, you can turn to the Law Office of Jim Snow in High Point, NC. To learn more about the firm’s estate planning services, visit their website and call (336) 889-4024 to discuss your needs with a knowledgeable, compassionate lawyer.