If you are in the beginning stages of estate planning in North Carolina, the various components of an estate plan may have your head spinning.
Wills and trusts can be confusing at first because the two are often referred to synonymously. However, there are some differences between the two. Here are some answers to help you decide which is right for you.
What is the difference between a will and a trust?
The difference between a will and a trust lies in what they each address. In addition to asset distribution, a will deals with final wishes, like end-of-life care and child guardianship. A trust, on the other hand, directs only the division of your financial assets.
With a will, your property remains in your possession until you pass and then goes through probate before making it in the hands of your heirs. With a trust, you earmark your assets to the trust while you are still alive and they automatically transfer to your heirs. A trust is more private than a will because it bypasses probate.
Which one is right for me?
If you have very minimal assets and want your final wishes honored at the end of your life, a will may prove sufficient. If you have significant assets and want to ensure their proper division, a trust may suit you. If you have final wishes to address and want more control over the division of your finances, you may want to have both a will and a trust.
Knowing the difference between wills and trusts can help you make sound estate planning decisions.