The Role of Private Trusts and Wills in Estate Planning

Estate planning in its effective sense is one of the most important steps people can take to ensure the future safety of their assets as well as proper care for beneficiaries upon their death. Among the most popular are private trusts and wills. Even though these estate management devices play different roles, which the other does not have, together they offer a well-rounded, robust plan.

 

 

 

What is a Will?
A will is simply a legal document that allows one to state the assets to be used after their death. It gives the testator the liberty to appoint who benefits from the said will and nominate an executor, and also make any wishes, such as appointment of guardianship for minor children, donation to charity, and many more. Wills are simple and form a common tool used in the transfer of assets after death.

 

What is a Private Trust?
A private trust is simply an agreement created by the settlor, the one who sets up the trust, whereby his property and/or assets are passed over to a trustee to deal with on behalf of the beneficiaries. One of the principal advantages of private trusts as opposed to wills is that the former can take effect during the lifetime of the settlor and are hence often used to manage assets more efficiently as well as privately.

 

Private Trusts Differ from Wills
While both Private Trusts and Wills have the function of transferring assets, their operation remains considerably different in terms of how they work and when they work. A will can only go into effect after the testator's death. A private trust can work during the settlor's lifetime. The former is subject to probate, while the latter is not. Trusts are more private and offer greater asset protection than wills, but in cases where a simple transfer of assets is the need, wills have it more straightforwardly.

 

The roles of Private Trusts and Wills are distinct but complementary. Indeed, the more full-bodied plan that would incorporate both instruments within it would hold greater control over the management of assets, minimize tax liabilities, protect assets from creditors, and ensure that one's beneficiaries are rightly cared for.