Estate planning consists of legal terms that are often difficult for non-professionals to understand. Anyone who owns property and valuables in Texas should know the similarities and differences of estate planning, wills and trusts.
A will, also known as a last will and testament, is a document that explains how a person’s property and assets should be distributed after death. Its contents can be challenged in court by beneficiaries and family members. An executor is assigned to hold the will and distribute the assets after the testator’s death.
A trust is a legal arrangement that allows one person, called a trustor, to give responsibilities to another person called a trustee. A trustee has similar duties to an executor, who is given the authority to manage an individual’s assets. After his or her death, the trust is given to one or more beneficiaries.
A will is a written document, and a trust is a close-knit relationship. A trust requires a few more steps to set up, such as the transfer of funds into a trust account. In addition, a trust can be created to avoid going through probate court and paying legal fees.
Creating an estate plan is the broad system of planning the distribution of a person’s estate after death. This process of preparing documents and choosing executors takes place during a person’s lifetime. Estate planning also means planning life and medical decisions in case a person becomes incapacitated due to an injury or illness.
Choose the right option
People may have heard about estate planning, wills and trusts and only know one term but not the others. All of these terms involve setting up a plan to sell, donate, transfer or destroy a person’s assets after death. Every type of legal arrangement has benefits that work for some people’s situations but not for others, so it’s important to know the differences.