Will or Trust?
The asset of someone who dies without a Will or a Trust is disposed of by operation of law, which may not be according to the wishes of the deceased person. Estate planning is a process of arranging and planning your succession for management and distribution of your wealth in a systematic and pre-determined manner to your heirs and to other beneficiaries. The most common vehicles for this purpose are the drafting of Wills and setting up of Trusts. Estate may include any movable and or immovable property like equity shares, bonds, deposits, jewellery, cash, bank balance etc that then gets passed on to the next generation. In order to make the optimum use of wealth created over a period of time and to protect it for the near and dear one’s it becomes crucial to plan. Both wills and trusts are designed to do the same thing – to pass on assets at death. Both can be very effective, but they use different methods to do it. Wills and trusts are essentially two different tools that accomplish the same goals. Deciding which tool is better for you depends on personal situation. What is right for one person might be very wrong for another person. Therefore, you need to fully understand these differences in order to decide which method is better under your circumstances. Many assume that they only need a simple will to best take care of their affairs when they pass away, and that only the wealthy need to have a trust.
Estate planning through Trust involves much more than merely making a Will. Trust is effective not only during the lifetime but also after death. Estate Planning through a trust route is one of the most reliable ways to assure that your assets will be managed for your family and loves ones as you had intended. In Estate Planning through Trust route, the person who owns the estate sets up a Trust, appoints trustees to manage the trust, transfers his estate to the trustees and names the beneficiaries of the trust.
There are certain advantages on why one should opt for a Trust over Will:
The primary disadvantage of a Will over is that it can be disputed after the death of a person making the Will. Even the best-drafted Wills can be challenged. Also, mental soundness of a person making the Will can be challenged in the court of law. Disposition of assets through Trust ensures passing on assets without causing any untoward problems for your heirs.
Will is a legal declaration of your desire to distribute property during the lifetime of a person but intended to take effect after his death. Trust involves transfer of your estate to a trustee for the advantage of certain beneficiaries while you are alive. Trust leads to efficient management of your estate during and after your death.
A trust is not subject to probate and can be kept confidential, whereas a Will becomes public document once probated.
A Trust saves some Probate Court expenses.
Probate is a sometimes a big hassle for survivors. There are numerous filings and notices, and sometimes delays occasioned by the necessity of getting Court approval for so many things