What's The Difference Between a Will and a Trust? | Osborn Gambale Beckley & Budd | Raleigh Wills — Osborn Gambale Beckley & Budd: Raleigh Personal Injury Lawyers (2024)

FAQs

What is the difference between the will and the trust? ›

An Overview

Estate planning can be done by writing a will or setting up a trust. While a will is a document that expresses the creator's wishes regarding the distribution of their property, a trust is an arrangement that allows a third party to hold and direct the creator's assets in the trust fund.

Will: a legal document that directs who will receive your assets and property at the time of your death. Trust: a legal arrangement where a “trustee” (someone you select) manages and holds title to your assets and property and distributes income to the beneficiaries that you select.

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Firstly, living trusts provide asset protection in California by avoiding probate. Typically, if someone passes away and leaves only a will, their assets are subject to probate review. This process can drag on because of court requirements, such as petition filing and mandatory public notice statements.

Cons of a trust

It may also require more of their time to set it up. “It's more expensive for them to assist or to guide you on transferring assets.” More complex. While wills are relatively straightforward, trusts can be more complicated to set up.

While wills are important, they come with certain disadvantages that are important to understand. The most significant downside to having a will is that when you die, it must go through the probate process. Probate occurs when a judge directs the handling of the will and is both time-consuming and expensive.

Many advisors and attorneys recommend a $100K minimum net worth for a living trust. However, there are other factors to consider depending on your personal situation. What is your age, marital status, and earning potential?

When trust beneficiaries receive distributions from the trust's principal balance, they don't have to pay taxes on this disbursem*nt. The Internal Revenue Service (IRS) assumes this money was taxed before being placed into the trust. Gains on the trust are taxable as income to the beneficiary or the trust.

Why Put Your House in a North Carolina Trust? The main reason to put your house in a trust is to spare family members from the probate process. While real estate generally passes directly to your heirs or beneficiaries, it can still be brought into the probate process in order to pay creditors of your estate.

For example, North Carolina's intestacy laws require that if a person dies without a will, their property will be distributed according to state law, which may not mirror your wishes. The probate process in North Carolina can be lengthy and costly, making a trust a potentially more appealing option for larger estates.

How do I start a trust in North Carolina? ›

Base document cost

Trust & Will is not a free platform — all of their online products cost money. Their Will Plan costs $159 for an individual or $259 for a couple. Their Trust Plan costs $599 for an individual or $699 for a couple.

Online wills work well in many situations and can meet most people's needs. However, if you have a very large or complicated estate, you may want to seek legal counsel directly to create your will.

Trusts bypass probate and are less likely to be successfully challenged, which gives your finances and beneficiaries privacy. Wills take effect after your death, so they do not protect your assets if you become incapacitated. Trusts can protect your assets if you are incapacitated while still alive.

The major disadvantages that are associated with trusts are their perceived irrevocability, the loss of control over assets that are put into trust and their costs. In fact trusts can be made revocable, but this generally has negative consequences in respect of tax, estate duty, asset protection and stamp duty.