Do you need a Will and a Trust? What are the main differences?

If you are looking to create your estate plan and you are considering what to include, Wills and Trusts are both documents that can be incorporated, to ensure that your assets are adequately protected and that they are distributed to your chosen beneficiaries when you want them to receive them.

Quite often the terms ‘Wills’ and ‘Trusts’ can be confused. For some people, they know that they have something to do with their assets and what happens to their assets after they die, but quite often people don’t realise that they are two very different agreements, that may be connected within an Estate Plan. However, they both serve different purposes, and your own personal circumstances and wishes dictate whether you should have both, or either, of these in your estate plan.

What is a Will

A Will is a legal, written document that explains and expresses your wishes, and becomes active after you die. It lists and details your assets, and how you want them to be distributed to your beneficiaries upon your passing.

Within your Will, you can include all or just some of the following: Property, investments, savings, pensions, cash, digital assets, wishes for your funeral, care of any pets you may have, and the names of the guardians who you have agreed, prior to your passing, will look after your children if they are aged under 18 when you die. 

A Will should also include details of the person who is to be the ‘Executor’ and who is to administer the Will. 

Your Will only becomes an active document, upon your death. 

What is a Trust

A Trust is an agreement made in writing, where you select an individual or a group of people known as the Trustees, to have control over cash and or assets on the behalf of someone else, who is the beneficiary of the assets, as detailed in the Trust.

An example of this would be if your grandmother had set aside a certain amount of money for you. Within the Trust, your mother is named as the Trustee. Upon your grandmother’s passing, your mother would follow out your grandmother’s wishes, in regard to how she wants the money to be distributed, in terms of the amounts and the timings. The Trust is a legally binding agreement made to ensure that your grandmother’s instructions are followed, and her wishes are adhered to. 

A Trust can also be used to minimise tax implications.

What are the main differences between a Will and a Trust?

In simple terms, a Will is drafted into a legal agreement to distribute your assets to your beneficiaries after your death. A Trust is drafted as an agreement of control of your assets. If you leave your home in your Will to your daughter, for example, that is an asset that becomes wholly hers and is hers to sell or live in as she wishes. She is free to do what she wishes with it, as are any beneficiaries named in a Will.

If that same property was held in a Trust for your daughter, your daughter does not have the same freedom to sell the property, the property is under the control of the Trust and Trustee or Trustees.

Another difference between a Will and a Trust is when they become active. A Trust kicks into action, on the day it is created, where assets can be listed and distributed before death. There are different types of Trust such as Living Trusts, which can be changed, and Irrevocable Trusts which cannot be changed after creation. See XXX (link through to another blog) for more information on the different Trust options available to you. 

Can I Have a Will and a Trust?

Yes, you can have both a Will and a Trust, as part of your Estate Plan. These agreements can complement each other, and you will have the peace of mind that your wishes are covered in detail. You will have the control you need over your belongings and assets, but bear in mind that the Trust has authority over a Will.  

To find out more about how you can create a Will and a Trust as part of your estate plan, give the Hello Estate Planning team a call on 0161 6765421.