A will is a legal document that allows you to designate who will receive your assets after you pass away. A trust is a legal arrangement in which a trustee holds and manages assets for the benefit of designated beneficiaries.
The primary difference between a will and a trust is that a will becomes effective only upon your death, while a trust can become effective immediately. A trust also allows you to manage your assets during your lifetime, appoint trustees to manage them after your death, and avoid the probate process.
Both a will and a trust are appropriate for estate planning, but the choice depends on your specific needs and circumstances. For example, if you have minor children or wish to distribute your assets over a longer period of time, a trust may be more appropriate. A trust also offers privacy because it is not a public record, while a will becomes a public record once it is probated.
However, there are some limitations to trusts, including the potential for higher costs, the need to transfer assets into the trust, and the requirement to periodically review and update the trust. Additionally, some assets cannot be placed in a trust, such as retirement accounts or life insurance policies, which must be designated through beneficiary designations.
It is important to consult with a licensed attorney to determine which option is best for your specific estate planning needs, taking into account your assets, family situation, and other relevant factors.
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