Difference between Will and Trust
In their quest to establish legal grounds for determining who is responsible for property at a given moment in time, people have implemented different systems. In all of these, it is of great importance to state from the beginning which are the rights over property one has and how it can be transferred to third parties when the case presents itself. The documents which will refer to this should contain clear transfer conditions to protect the actual owner from any malicious act performed by a misleading trustee. Property is an asset of considerable value. This is the reason for which the law is very strict about transfer possibilities.
Property Transfer
According to common law, in a trust arrangement, the person who owns property can transfer all or part of it so it can be managed by a trustee of their choice. He remains the beneficiary of the trust results, but needs to pay a small fee to the trustee for its management services. The property transfer occurs while the actual owner is still alive. A will is a document stating that property is to be transferred according to certain conditions established by the property owner to members of the family or third parties of their choice. The property transfer takes place after the owner’s death as stated in the will. If the owner of property doesn't leave a will, inheritance laws apply.
Probate
The probate procedure implies that an owner’s property will be administered by the court after their death if the person in question has left a will. The document will become public so financial affairs are available to anyone who would like to learn more about it. To keep a sense of privacy, the owner can revert to the solution offered by a living trust. In this way, he avoids for the property to be handled by a court. But in order to achieve this, all assets mentioned in the will need to be a part of the trust fund.
Beneficiary
In a trust arrangement, the beneficiary is the owner of the trust. He continues to receive the results of any transactions related to its ownership, while the trustee holds the legal title over the property being responsible to invest carefully the trust’s financial resources to obtain the expected outcome. The beneficiary of a will is the heir designated to administrate the property after the owner’s decease and after complying with the terms of the will.
Summary
- A trust entails property legal title transfer when the actual owner is still living, while the will implies property transfer after the owner’s death.
- A will must be subjected to the probate procedure, while a living trust doesn't need to.
- The beneficiary of a trust is the actual owner of the property, while the beneficiary of a will is the heir designated in the will.
