When discussing a will and a family trust, many people misunderstand the two as being identical. Although both can be used for estate planning, they have completely different applications and goals.
A family lawyer must be retained to provide legal counsel on the client’s rights, liberties and property within the framework of legislative and legal rights and to represent the client in the event of a disagreement before an adjudicative authority.
If you are the sole owner of your estate, you may be able to choose either a will or a trust as your planning tool. But if you have a spouse, children or other beneficiaries, the best way to ensure that your wishes are carried out is to establish both a will and a trust.
So, how should you go about deciding whether a will or trust is best for you and your family? Let’s go find out.
What Is the Difference Between a Will and a Trust?
A family trust is a form of discretionary trust established to hold the assets of a family. The controller of the family trust (the trustee) distributes the trust’s income and assets to the other family members under the trust deed (the beneficiaries).
A trust is a legal relationship between a trustee, who manages or administers the trust, and a beneficiary, who receives the trust’s benefits. A trust imposes a legal obligation on the trustee to take care of the trust property, invest it prudently and use it for the advantage of the beneficiary. The beneficiary has the right to receive trust benefits by the conditions of the trust, as well as certain rights to information regarding the trust and the trustee’s administration.
A will, on the other hand, is a document that specifies the disposition and distribution of your property upon your death. A will explains and directs the management of your assets. During one’s lifetime, a will is drafted, signed and
then registered with the courts. After death, the court grants probate, which is the legal process of authenticating a will. The executor named in the will carries out the deceased’s wishes as directed in the document.
Although both documents are important tools in estate planning, there are several key differences between a will and a trust.
One main distinction between a family trust and a will is the timeline in which you use each document. A family trust typically makes annual distributions whilst you’re alive. You keep possession of the property in a will until you die. Only after you pass away does your estate go to the beneficiaries.
The second difference is that a trust can avoid probate whilst a will cannot. Probate is the legal process of distributing your assets after you die. It can be costly and time-consuming, so many people try to avoid it if possible.
A family trust avoids probate because the assets in the trust are not technically part of your estate. The trustee, the person in charge of administering the trust, can simply transfer ownership of the assets to the beneficiaries without going through probate.
Furthermore, in a family trust, the title of the assets is in the name of the trustee on behalf of the trust. The property still belongs to the trust whether or not the trustee is alive or deceased. During your lifetime, the title to the assets continues to be with you in a will. The title only passes upon your death and after the distributions are made and finalised.
When Do Trusts and Wills Go into Effect?
In a trust, you can give away your property whilst you’re living. You can place an asset in a trust, which is managed by a trustee with assigned beneficiaries who can receive income from the asset or receive it at a certain time or date. Trusts take effect instantly and help manage your affairs whilst you’re alive. A trust can help handle accidents, disabilities and complex financial and familial systems.
On the other hand, a will specifies how your estate will be split after death. It’s a plan that’s followed by your executor after your death. It can also entail guardianship and ultimate wishes. If you want to leave assets, property or a portion of your estate to a person, charity or organisation when you die, you would name them as beneficiaries in your will.
Do I Need a Will or a Living Trust?
If you want to ensure that your property is distributed according to your wishes and avoid probate, then you should have both a will and a trust.
A will is essential to have because it ensures that your property is distributed according to your wishes. Even if you have a trust, you still need a will to deal with any property that’s not in the trust.
Trust is important because it can help avoid probate. And trust can also provide more privacy than a will because trusts don’t become public records as wills do. If you have a complex financial situation or want to provide for someone with special needs, then a trust may be the best option. It can also be used to manage property during your lifetime and after your death.
Because of their complexities, it’s vital to talk with your lawyer or financial advisor to decide if a will or trust, or both, is right for you.
What to Do If I Don’t Have Either Trust or Will?
Family law provides intestate succession for people who die without a will in place. This means that your state has predetermined who will receive your property. This can be done by applying for a Grant of Letters of Administration that will need to be made to the Supreme Court. Most often than not, the deceased’s closest relative has to apply for this grant. For example, the spouse, domestic partner or child of the deceased.
- The partner and children will automatically get the assets.
- If the deceased had no spouse or offspring, then the entirety of their estate goes to the following relatives:
- Aunts and uncles
- If there are no living relatives, the estate passes to the government.
How Madison Marcus Can Help You
When it comes to estate planning, one of the first decisions you’ll have to make is whether to set up a will or a trust. Whilst both options have their advantages, the right choice for you will ultimately depend on your specific circumstances.
If you need help deciding if a will or trust, seek legal help from law experts like Madison Marcus. We are a leading law firm in situations where law, business and technology connect, assisting clients in achieving their goals and inspiring them to succeed.
Madison Marcus can help you with the process and provide expert legal advice. We can assist you with drafting your will or trust, or both. We can also help you with intestate succession and applying for a Grant of Letters of Administration.For all enquiries or initial consultation, contact us here.