What Is the Difference between a Trust Agreement and a Will

When it comes to estate planning, many people often confuse trust agreements and wills. While they both serve the purpose of ensuring their assets are distributed as per their wishes, there are significant differences between the two.

A trust agreement is a legal document that outlines how a person`s assets will be managed during their lifetime and after death. It allows a person to transfer assets to a trustee, who will hold and manage them on behalf of beneficiaries. The trust agreement can be created while the person is alive or after their death through their will. There are various types of trusts, including revocable trusts, irrevocable trusts, charitable trusts, and special needs trusts.

On the other hand, a will is a legal document that outlines how a person`s assets will be distributed after their death. The document names an executor, who is responsible for carrying out the instructions provided in the will. A will can also be used to appoint guardians for minor children, establish trusts, and name beneficiaries.

One of the primary differences between a trust agreement and a will is that a trust can be used to manage assets during a person`s lifetime, while a will only takes effect after their death. This means that if a person becomes incapacitated, their assets in a trust can be managed without the need for court intervention, while a will cannot be used until after death.

Another difference is that trusts generally offer more privacy than wills. When a will goes through probate, it becomes a public record, and anyone can access the information. However, a trust agreement is private and does not go through probate, meaning that the details of the trust and the distribution of assets are kept confidential.

Additionally, trust agreements can provide added protection against lawsuits, divorce, and creditors. Assets held in a trust are not considered part of the estate and, therefore, are protected from legal action. In contrast, assets distributed through a will are subject to claims from creditors or lawsuits.

In conclusion, both a trust agreement and a will play a crucial role in estate planning, but they serve different purposes. A trust agreement can be used to manage assets during a person`s lifetime, offer more privacy, and provide added protection against lawsuits and creditors. A will, on the other hand, only takes effect after death and outlines how assets will be distributed. A person should consider their particular situation and consult with an attorney to determine which option is best for them.