An Overview of Wills vs. Trusts in North Carolina Estate Planning
Planning for the future can feel frustrating, uncomfortable, and intimidating, so let us help take the guesswork out of it. If you are considering starting an estate plan or evaluating a current plan and are wondering how wills and trusts differ, this legal guide will help explain it. If you need help with estate planning or just have a question, do not hesitate to contact us for an initial consultation (don’t worry—it’s free).
What Wills and Trusts Do
Will: a legal document that directs who will receive your assets and property at the time of your death.
Trust: a legal arrangement where a “trustee” (someone you select) manages and holds title to your assets and property and distributes income to the beneficiaries that you select.
Wills and trusts are both legal estate planning documents that let you decide before you die what happens to your home, property, assets, and even custody of your children after you die. Wills and trusts each have their own advantages and disadvantages but a good estate plan will include both a will and a trust to fully protect your estate.
When Wills and Trusts Take Effect
Will: goes into effect after you die and dictates who will receive your property and assets.
Trust: goes into effect as soon as its signed and allows you to transfer property and assets while you are still alive.
One advantage for using a trust is that trusts can be used to begin distributing property before death, at death or even sometime afterwards. That isn’t helpful or important in all cases, but it provides a level of flexibility that a will simply can’t.
What Property Can Be Inherited Through Wills and Trusts
Will: only covers property that is in your name when you die. If you don’t own it, you can’t give it (except in certain instances).
Trust: only covers property that has been transferred into the trust and put in the name of the trust.
How Mental Disability Affects Wills and Trusts
Will: only goes into effect after you die so it is no impacted by mental disability or incapacitation.
Trust: certain kinds of trusts (like revocable living trusts) can include provisions in case you are disabled or incapacitated goes into effect as soon as its signed and allows you to transfer property and assets while you are still alive.
Wills Require Probate; trusts don’t.
Will: property and assets have to go through probate first before being transferred to beneficiaries
Trust: property and assets put in a trust bypass probate.
Wills become public record; trusts are private.
Will: become a matter of public record when they’re submitted to the court for the probate process
Trust: there is no requirement to file a trust so they remain private and only known to those involved.
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