Understanding the tools available for managing your estate is crucial when planning for the future. Two of the most common estate planning tools are wills and trusts. While both serve the purpose of distributing assets, they differ significantly in structure and application. Knowing these differences can help you make informed decisions about your estate planning needs.
Does a will only take effect after death?
A will is a legal document that specifies how you want your assets divided following your death. It can also include directions for caring for small children, such as naming a guardian. In Virginia, a will must be in writing, signed by the testator (the person making the will), and witnessed by two competent people. Wills become effective only after death, and the probate court monitors the distribution procedure.
Executors, named in the will, manage this process. The primary purpose of a will is to ensure your wishes are honored and to provide clear instructions to avoid family disputes. Wills are especially useful for anyone with assets or dependents, regardless of the estate’s size.
What is a trust?
A trust is a legal arrangement in which one party, known as the trustee, holds and manages assets for the benefit of another party, the beneficiary. Virginia uses trusts to manage complex family dynamics or assist beneficiaries who need assistance managing assets. Trusts involve:
- The grantor who creates the trust.
- The trustee who manages it.
- The beneficiaries who receive the benefits.
A person can create a trust during a person’s lifetime (living trust) or after their death (testamentary trust). They offer privacy since they do not go through probate and can provide tax benefits, asset protection, and detailed control over asset distribution.
Having legal support
Drafting a will or trust involves complex legal considerations. With the proper legal guidance, you can ensure these documents comply with Virginia laws and reflect your wishes accurately. They help avoid common pitfalls that could lead to legal challenges or unintended consequences.
They can also offer personalized advice based on your unique situation, helping you choose the right tool for your estate planning goals. Working with a legal professional provides peace of mind, knowing your affairs are in order and your loved ones will be cared for according to your wishes.