The Difference a Trust and a Will
When you are planning your estate, it is important to understand the differences between a trust and will. Simply put, a trust allows for one party to hold the right to manage the assets of the beneficiary for their benefit. This arrangement involves three parties, the “trustor” who creates the legal entity, the “trustee” who manages the assets, and the “beneficiary” who have property of the assets.
A will is a legal document that explains where you would like your assets, such as your house and your money, to go when you pass away. The creator of the will in known as a “testator,” and the people who receive the assets are known as the “beneficiaries.”
The person who manages the assets until they are distributed to the beneficiaries is known as the “executor.” A will must go through probate to be approved by the court after the testator has passed away.
One of the main differences between a trust and a will is that a trust goes into effect as soon as it is created, while a will takes into effect after the testator passes away. A trust only covers property that is in the name of the trust. A will covers any property that is only in your name when you die and does not cover property in a trust or joint tenancy.
Unlike a will, a trust does not pass through court which can save money and time. A trust may also remain private. Each is good for their own purposes. For example, a will allows you to appoint guardianship for your children while a trust can help you plan for disability.
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*All policies are a little different and this may not be applicable to your insurance policy, talk to your agent to see what your policy covers.*