Where law and finances meet, there are often many confusing and conflicting terms that people struggle to understand. Many of us could use some help in defining legal language or just to guide us through all of the red tape following the death of a loved one. One of the areas I find confusing is the difference between a will and a trust. Many people wrongly believe that those two refer to the same thing, when in fact there’s a world of difference between them and if you’re not familiar with the language, you likely wouldn’t even confuse them to begin with. If this happens to you, you may wish to contact a law firm, such as Albertson and Davidson, who can help you with more than just definitions. Such firms can help you administer the wishes of your loved ones and ensure that all parties are treated fairly.
A will is something left by a person close to their time of death, for the purpose of leaving some of their assets (or in most cases, all of them) to certain “beneficiaries” – people in their close circles who could, in the opinion of the testator (the person leaving the will), make proper use of the assets they’ve been left. For example, a dying businessman may want to spread his wealth between his wife and children, and perhaps leave something for charity – they would write that in their will and then submit it for proper processing.
The processing of a will involves various steps required by law to ensure the legitimacy of the will’s contents – for example, the will has to be signed not only by the testator, but also by several other parties, some of them independent to the case (such as a notary and at least two witnesses who aren’t beneficiaries themselves). In addition, the will must be created at a time when the testator is in a sound state of mind and capable of taking such important decisions on a clear head.
Next in the comparison of a will vs trust, we should outline the basic idea of a trust. A trust refers to property (or any kind of assets, really) given by one person to another, for the purpose of keeping those assets safe and in a good condition on behalf of a third person. This may sound confusing, but to put in simple terms: person A (called the settlor in legal terms) gives some property to person B (the trustee) so that person B can manage that property on behalf of a third party, person C, called the beneficiary.
Trusts are very popular in some parts of the world and there are various other legal tools related to the idea of a trust, such as an investment trust which involves managing finances for a beneficiary. Even though a trust is somewhat similar to a will in its most basic sense, it involves the assets of a living person, which is perhaps the greatest difference in the will vs trust comparison.