What is the difference between a will and a trust?
We’ve all heard the terms “will” and “trust”, but not everyone knows the differences between the two. Both wills and trusts are useful estate planning devices that serve different purposes and both can work together to create a complete estate plan.
One main difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. By contrast, a trust can be used to begin distributing property before death, at death or afterwards. A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a "trustee," holds legal title to property for another person, called a "beneficiary." A trust usually has two types of beneficiaries -- one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.
A will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust. A trust, on the other hand, covers only property that has been transferred to the trust. In order for property to be included in a trust, it must be put in the name of the trust.
Another difference between a will and a trust is that a will passes through probate. That means a court oversees the administration of the will and ensures the will is valid and the property gets distributed the way the deceased wanted. A trust passes outside of probate, so a court does not need to oversee the process, which can save time and money. Unlike a will, which becomes part of the public record, a trust can remain private.
Wills and trusts each have their advantages and disadvantages. For example, a will allows you to name a guardian for children and to specify funeral arrangements, while a trust does not. On the other hand, a trust can be used to plan for disability or to provide savings on taxes. Your elder law attorney can tell you how best to use a will and a trust in your estate plan.
What is a last will and testament?
A last will and testament is a legal document that details how your estate should be divided when you pass away.
It sets out:
By making sure that your last will and testament is in place, valid and up to date you can:
What happens when you don’t have a will?
Many South African’s remain ignorant of the possible ramifications of not drafting a final Will and Testament.
Not drafting a Will, in the proper legal manner, can result in:
According to the Intestate Succession Act 81 of 1987, “your estate will devolve in terms of the rules of intestate succession”
This usually means that your spouse will be first in line to inherit your Estate, immediately followed by any surviving heirs along the succession path. In 9 out of 10 cases this will be exactly what the Estate owner intends. However, the manner in which the Estate is distributed (and the stipulation of the individual heirs thereof) will not be specified, leaving your heirs with a possible nightmare on their hands: fighting over who gets what.
Trust and Fiduciary services include the drafting of Wills and strategic Estate Planning. Drafting a Will and commencing with effective Estate Planning can protect your loved ones from possible repercussions, such as lawsuits and bankruptcy, in the event of your death.
De Meyer De Vries Attorneys / Conveyancers is a boutique legal firm that specialises in various forms of law. We provide our clients with tailor made legal solutions. We have solution driven lawyers that aim to give you legal peace of mind. For more information about wills and testaments and how we can assist you, please contact us.
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