Wills and trusts are both vital aspects of your overall Minnesota estate planning. Everyone should have a legal will in place to provide specific instruction for the settling of their affairs after death, but not everyone will need a trust. There are different types of trusts for various purposes, and they are different from your will. Schindel Segal Mendoza PLLC offers this simple explanation of the difference between a will and a trust.
What is a Will?
Your will is a written, legal document that spells out your instructions for carrying out your final wishes after your death. It includes instructions for whom is to serve as your personal representative and settle your estate, lists your beneficiaries and designates what they are to receive, names guardians for any minor children and any other specific instructions you wish to be carried out upon your death.
A will is carried out after your death and proper verification by a probate court. Without a will on record, the Minnesota law requires the courts to handle the disposition of your affairs. Strangers will make decisions about distributing your assets, caring for your minor children and more. Every person, regardless of the size of their estate, should have a legal will.
What is a Trust?
A trust is a legal means for protecting your assets. Anything placed into a trust becomes the property of the trust for the benefit of a third party. You no longer own the assets – they now belong to the trust. When setting up the trust, you can choose who is responsible to administer the trust and its assets and name its beneficiaries. A trust allows you to protect assets from the risk of creditors, litigation and a certain amount of taxes.
Most people with larger estates will be interested in protecting their assets and preserving them for select beneficiaries by using various trusts. An estate planning attorney with Schindel Segal Mendoza PLLC can discuss the different types of trusts and how you could benefit from them in a confidential consultation.
Main Differences Between a Will and a Trust
There are three main differences between a will and a trust.
Timing – A trust goes into effect as soon as the paperwork is completed and signed. They stay in effect forever, or until a time specified in the trust when it is to be dissolved. A will ONLY goes into effect upon your death. Until then, it is just a plan on paper for the future.
Property Control – A trust controls only the property that is placed into it, and nothing more. This does not change in the event of your death. A will manages the property not in trust and in the name of the deceased at his or her death. Jointly owned property is not included.
Probate – With a will, your estate matters must pass through the probate process and be verified and approved by the court. This is a public process and all matters are on the record. A trust handles matters outside the probate court and is private.
A Minnesota estate planning attorney from Schindel Segal Mendoza PLLC can answer your questions about wills and trusts and help you determine the best uses for each in a private consultation. Call today to schedule yours.