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Wills and Trusts Planning are so important after you work hard for your money and make every effort to be a saviour to your loved ones.
Wills and Trusts planning
Although the two terms; ‘wills’ and ‘trusts’ are often confused, they are different in a few important ways. Which suits you better might come down to your situation and concerns. So what is best for you? Find out about what wills and trusts planning we have here and whether one might be right for you.
What is a will?
The legal documents you provide to declare your will for the person you care about how you distribute your assets after you passed away. A will is a document that leads who will receive your property on your death and appoints a legal representative to perform your will.
What is a trust?
On the contrary, trust can be used to initiate the distribution of property before death, at death or afterwards. Trust is the legal arrangement in which a person (or institution, such as a bank or law firm), called “trustee,” holds the legal right to property for others, called “beneficiaries.”
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Why do I need a will?
Without a will, your assets can give you more trouble than to benefit your family when they are most vulnerable.
Your loved ones can be involved in the old legal process or fight in complex legal battles with other family members.
Without a will, the law will decide who your beneficiaries, trustees, and guardian would be.
There is a legal process to go through before your loved ones can benefit from your assets. Leave nothing to chance.
Make a will, and the law will protect your wishes.
Can I write my own will and trust?
It is often not advisable to write down our will as we may not achieve what we want and avoid what we do not want.
The following might happen:
- May not take care of your worries
- May not help to realize your goals!
- May not be granted a Probate – Vague
- Partial intestacy – No residual clauses
- Not fully aware of certain legal implication
- No appointment of guardian for minor children
- Easily subject to contest in court, may cause future problem
- No assurance/ protection to beneficiaries e.g. no trust fund to protect family members
What is the difference
between a will and a trust?
One difference between the wills and trusts is that the wills only will come into effect after you die, while the trusts come in as soon as you make it. Wills is a document that directs to who will receive your property on your death and appoints a legal representative to perform your will.
Another difference between wills and trusts planning is that a will passes through probate. This means that the court oversees the administration of the will and ensures that the will is accurate and the assets or property will be distributed by the way the deceased wishes. Trust goes beyond probate, so the court does not need to keep an eye on the process, which can save time and money.
There are three parties involved in Trusts
- The Settlor – Person who sets up the Trust.
- The Trustee – The person or a corporation who manages the Trust assets.
- The Beneficiary – The person who receives benefits from the Trust.
What assets can be included in a trust?
The assets commonly used to set up a trust are cash, insurance policies, unit trust, properties, shares. The property under Trust does not belong to the Trustee personally. Though the trust property is registered in the Trustee’s name, it is never part of the Trustee’s own properties when he dies. Only the Trust beneficiaries will be entitled to the Trust Fund, not the Trustee’s own beneficiaries.
Generally, trusts are more expensive and use more time, but they can allow your beneficiaries to skip probate, which is a time-consuming legal process that involves court checking your estate and sometimes storing your assets from the hands of heirs you for months. Meanwhile, wills are more easy to create and amend.
Establishing a Trust
Like the wills, a trust also describes how one’s assets will be managed and distributed after his death. But it also allows the person called a The Settlor to designate someone to operate and maintain his holdings throughout his life if he is incapable.
To establish Trusts, the settlor would write trust documents and transfer ownership of the selected property to that trust. He also names the trustee to manage trusts for beneficiary benefits (or multiple beneficiaries).
A living trust is in action throughout the settlor’s lifetime. The settlor may appoint himself as the trustee of a prerequisite so he can manage the trust property himself. If he calls himself a trustee, he must also appoint a trustee to manage the trust and to distribute his assets after the applicant becomes incapacitated or dead.
A cancellable trust can be changed at any time as long as the settlor can do so. An irrevocable trust can not be changed.
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