What are wills and trust?
A will is a legally binding document written by a person to specify how his assets and possessions will be managed after death. If there is no will written, there are strict laws imposed by the government which will apply to the distribution and disposal of assets which may not be against the deceased’s wishes. For example, if a couple is unmarried, the living partner will not be entitled to the same benefits as a married person unless there is a will.
What is a trust?
A trust is another way of managing assets. One type of will is a trust will where the person whose will is to be put in writing includes a trust that puts a portion of the assets awarded to a beneficiary on hold until a specified amount of time has lapsed. A trust involved in a will is suitable when a beneficiary is a minor or has physical and mental disabilities.
In general, a trust can be set up because of many reasons which include the following:
- A trust is used to manage or control family assets.
- It is also used in instances when the beneficiary is not deemed responsible enough to manage his affairs.
- A trust can be included as part of a will to pass on the possessions of a deceased individual.
There are three individuals involved in a trust namely: the settlor, the trustee, and the beneficiary.
The settlor is primarily responsible for deciding on how the asset will be divided or managed. The trust deed is an accompanying document which explicitly states these conditions. In some instances, the settlor may also benefit from the trust. This is true for settlor-interested types of trusts.
The appointed trustee is the person who legally owns all the assets named in the trust. They are responsible for the following:
- Manage the assets following the wishes of the settlor.
- Managing the assets also entail paying for taxes.
- Make decisions on how the assets will be used, such as putting it in investments.
The trustee or trustees appointed in a trust can change, as long as there is at least one trustee at any point in time.
The beneficiaries of a trust can get income from the trust, benefit from the capital of the trust, or get benefit from both the income of the trust and the capital of the trust.
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