An estate plan is essential for every individual, regardless of his or her income or financial standing. If you have not taken this important step, you are risking the appropriate administration of your estate, and your loved ones may not receive their intended share of money and assets.
Estate planning differs on a case-by-case basis. You need a plan that is uniquely suited for your needs, wishes and the value and size of your United Kingdom estate. A will is the most basic component of any estate plan, but you may also benefit from the establishment of a trust. There are distinct differences between the two, and understanding them can help you make the best decision for you and your loved ones.
Understanding the differences between a will and a trust
Some may only need a will, while others will find it beneficial to protect their money through the establishment of a trust. The differences between these two legal protections are as follows:
- A will: A will goes into effect only after you die. This document outlines how you want your property distributed and where you want your money to go, whether it is to family members, other heirs or a charitable organization. A will designates a specific person to oversee the administration of the estate and also designates a guardian for any minor children who may be left behind.
- A trust: Rather than after your death, a trust can take effect as soon as it is established. A trust can designate and distribute certain assets to beneficiaries before your death or set them aside for an heir once he or she reaches a certain age. A trust only covers property that is already put into the trust, and it will not have to pass through probate after your death. A trust cannot name a guardian for your children.
A trust is capable of doing much more than simply protecting certain assets and property holdings. If you are caring for a disabled family member, a special needs trust will ensure that money is set aside and protected for the medical care and comfort of your disabled loved one, even after you are gone. A will cannot do this.
While everyone needs a will, not everyone will need a trust. What you need to include as part of the plan for your estate depends solely on your individual needs and your unique objectives for your estate.
