The difference between wills and trusts in estate planning

On Behalf of | Jan 26, 2022 | Estate Planning |

Planning for the future is something that many people in Texas put off until it’s too late. Estate planning via wills and trusts is important to take care of, especially if you want to make sure your family will be provided for when you’re gone. Although will and trusts may seem similar, there are some big differences between them.

What is estate planning?

Estate planning is the process of arranging for the management and distribution of your property after you die. This includes making a will, setting up trusts, and naming executors and beneficiaries. The goal is to make sure your assets get distributed according to your wishes and that your loved ones get taken care of after you’re gone.

What is a will?

A will is a document that lays out your wishes for the distribution of your property after you die. It can also name an executor who will be responsible for carrying out your wishes. You can change your will at any time; it’s a good idea to update it regularly as your life changes.

What is a trust?

A trust is a legal entity that holds property for the benefit of someone else. The person who sets up the trust is typically referred to as the settlor, and the person who benefits from it is called the beneficiary. There are many different types of trusts, but all trusts have three basic elements: a settlor, a trustee and a beneficiary.

How do wills and trusts differ?

The main difference between wills and trusts is that a trust is typically designed to hold property for the benefit of another person while a will distributes property after someone dies. Not everyone needs a trust to pass on their assets, but it may offer tax and privacy benefits as compared to a will.

It’s important to understand the difference between wills and trusts so that you can make the best decision for your family. You may find that using a combination of wills and trusts is the best solution for your situation.