Wills vs. Trusts: Know the Difference

Many people question what is the difference between a will and a trust. Wills and trusts are both estate planning tools that can help ensure your assets are protected and bequeathed to your heirs, besides your spouse, which is generally not an issue. This is because the unlimited marital deduction provision within the United States Estate and Gift Tax Law allows the passing of wealth to a surviving spouse without incurring gift or estate tax liabilities.  

However, the transfer process becomes much more involved when wealth is passed to a subsequent generation. It is possible to have both a will and a trust.

A will is a written document expressing a deceased person’s wishes, from naming guardians of minor children to bequeathing objects and cash assets to friends, relatives, or charities. A will spells out how you want your affairs handled and assets distributed after you die. A will becomes active only after one’s death. A trust is active the day you create it, and a grantor may list the distribution of assets before their death in it, unlike a will. There are irrevocable trusts, often created for tax purposes, which cannot be altered after their creation, and living trusts, which can be changed by the grantor.

All wills must go through a legal process called probate, where an authorized court administrator examines them. This process can be lengthy and potentially contentious if family members contest the will. However, trusts are not required to go through probate when the grantor dies, and they cannot be contested.

Does your estate plan include The Library Foundation? Would you like to? Contact Erin today to discuss how a gift to the Library could be included in your plan. Send us a message at Foundation @ tscpl.org

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