What are the differences between wills and trusts?

What are the differences between wills and trusts?

Wills and trusts are both estate planning tools, but they serve different purposes. A will outlines how your assets will be distributed after your death, while a trust can manage your assets during your lifetime and after your death.

Can you explain how a trust works?

Sure! A trust is a legal arrangement where one party holds assets for the benefit of another. The person who creates the trust is called the grantor, the person managing it is the trustee, and the beneficiaries are those who receive the benefits.

Are there any tax benefits to using a trust?

Yes, trusts can offer tax benefits, such as avoiding probate and potentially reducing estate taxes. However, the specifics can vary based on the type of trust and individual circumstances.

Which one is better for estate planning?

It depends on your individual needs. Wills are simpler and less expensive, while trusts offer more control and can help avoid probate. Consulting with an estate planning attorney can help you decide.