Wills and trusts serve different purposes
One of the first questions some South Carolina residents may have about estate planning is what is the difference between a will and a trust? They are not interchangeable documents, but they are often used in conjunction with each other.
A will is public and essential
At a minimum, a person should draft a will so that decisions about the estate are not solely in the hands of a probate court. A will enables you to:
- Appoint an executor to administer the estate
- State what happens with your possessions
- Say who gets what
- Name guardians for minor children if applicable
Although your will directs what happens upon your passing, it must still be submitted to a probate court. By filing a will with the court, it becomes a matter of public record. At times, people wish to keep various details of their estate private. To accomplish that, they turn to trusts to handle the bulk of their estate matters.
Trusts promote privacy and asset protection
A trust creates a separate legal entity. Its terms do not have to be disclosed publicly upon your passing. The document can contain specific directions for how to distribute assets that do not require oversight by a probate court.
Without court involvement, trusts activate quickly instead of taking months like a will. Additionally, people shift assets into trust for distribution to beneficiaries because it puts a legal barrier between the assets and beneficiaries’ creditors. The trust receives the funds instead of the person who the creditor has a financial claim upon.
Developing an estate plan takes time as you consider the variables related to your estate and beneficiaries’ lives. Even once you create a plan, you may need to update it periodically as the years go by.