Wollaston Associates

Both Wills and Trusts are used to say who will receive a person’s assets, but they do it in different ways, each with its own advantages and disadvantages.
 
A Will is a legal document that comes into effect from the point at which a person passes away. It cannot be implemented while someone is alive.

A Trust can be created either in a Will or during a lifetime. If it is in a Will, it will only become operative at the time the administration of the estate is complete. If it is in a lifetime document, it can take effect immediately. Control of your assets and money is handed to a Trustee, who manages the assets on behalf of your beneficiary/ies.

Wills

A Will is about the distribution of assets after your death and when creating a Will, there are multiple things to consider:
 
1 – What assets are there to give?
Common assets of a person’s estate include property, investments, jewellery, cars etc. It is important in the early stages of preparing a Will to clearly state which assets are intended to be passed on.

2 – Who will be the beneficiaries?
Identifying the beneficiaries is the most important part of the Will and clearly stating who they are is vital to the execution of a Will.

3 – Will there be any special circumstances?
It is not uncommon for an asset to be held for a loved one in situ for a time before being passed to the beneficiary. This can often be due to their age or mental capacity. The process is completed via a third party who will take care of the asset before passing it on to the intended beneficiary.

4 – Who is the executor?
The appointment of the right executor can be the difference between wishes being followed to the letter or not at all. The executor is the person responsible for distributing the assets. An executor can be a loved one, a friend or somebody trusted who has a more thorough understanding of the law and the procedures to follow.

Trusts

A Trust is an effective Estate Planning method that can be put in place.

Trusts are often associated with the extremely wealthy, but this is a misconception as a Trust can be beneficial for anybody, no matter their net worth. The purpose of a Trust is to leave assets behind for a loved one in a controlled environment.

A Trust allows a party to set aside their assets and funds for loved ones / friends / charities, while being freely able to state how, where, when, and why they wish for them to be distributed in that way.

During the process, one or more persons will be appointed by the party providing the funds (the grantor) to the position of trustee.

A trustee is responsible for the assets held within the Trust and to make sure that the wishes of the grantor are followed.

There are multiple different types of Trust – depending on the situation and stipulations the grantor wishes. The most common are:

Asset protection
Family
Property protection

One of the biggest reasons for confusion between Wills and Trusts is that there is some overlap between the two in key areas. However, both are there to protect and benefit loved ones; it is just the method and circumstances of protection and the total package that differs.

Among the key differences between the two are that Wills don’t go into effect until you pass away, whereas a Trust can go into effect immediately upon it being signed. Additionally, in Wills, unlike Trusts, arrangements can be made for children and pets, with the opportunity to also specify final arrangement wishes.

Conversely, Trusts are more complicated agreements, meaning that more detail can be added into any wishes, with more stipulations and conditions than in a basic Will.

Which is better: a Will or a Trust?

Both Wills and Trusts have their own distinct advantages, but are both different in so many ways that one can never be definitively seen as better than the other – they are both essential forms of estate planning, and both offer protection and peace of mind for you and your loved ones.

The pros of a Will include:
It provides children and pets to be included;
It avoids assets being distributed according to the laws of intestacy; and
It avoids large inheritance tax implications.
 
The pros of a Trust are:
Its terms are more private;
Heirs are able to avoid probate; and
It provides greater control over what happens to your assets than a Will.

Ultimately, as a client of a professional advisor, you have the opportunity to have a full discussion about your future planning and wishes. Only through this conversation can you identify what a Will can help fulfil and if a Trust is also needed.