What is the difference between Wills and Trusts?

Many people in Peterborough do not understand the difference between wills and Trusts. In fact, it is estimated that 70% of people in the UK do not have a will in place and this could be because they simply don’t want to think about the consequences of death or have no understanding of how to employ Will Writing services without paying fees that they cannot afford. The fact is, by having a will in place you will be protecting your assets and saving a lot of hard work for your loved ones.

Many Will Writing companies do offer free, impartial advice on wills and Trusts and are focussed on approachable customer service. An initial consultation will enable you to discuss your circumstances and wishes whilst finding out more about the costs and options available. This initial consultation is highly recommended especially if you are unsure of the difference between a will and a Trust.

A standard will

A standard will is the best way to ensure that your assets will be left to your loved ones. If you don’t have a will in place then the courts will decide what will happen to your assets. However, if you do have a will in place then in the event of your death your chosen Executors would apply for ‘grant of probate’ from the probate registry. Your Executors will then make sure that your beneficiaries receive what you have allocated to them from your estate.

If your wishes are straightforward and you don’t have concerns about inheritance tax, remarriage or bankruptcy then a standard will can be used.

If you don’t have a standard will in place, then your partner will not automatically be left your assets and if you are not married, your partner may not receive anything. Children could be taken into care until Guardians are appointed and there could be disputes raised. This isn’t a situation that anyone would want to leave their family in.

Trusts

When it comes to wills v trusts, unlike a standard will a Trust is used in estate planning. The difference between a wills and Trusts is that with a Trust, it’s a way or protecting your estate. The proceeds of your estate are put into Trust and therefore protected. This helps to reduce any tax payable such as inheritance tax. Inheritance tax isn’t payable on any assets that are placed in Trust. Each year around £1.3bn is paid in inheritance tax needlessly by people who could have taken action to mitigate against these costs which is a shocking statistic. Inheritance tax can often be virtually eliminated through careful estate planning; ensuring that the maximum amount of money from your estate is passed to your children.

Another difference between wills and Trusts is that if your assets are placed in Trust then the proceeds can be accessed straight away, unlike a standard will where it has to go through probate before assets are released. Probate is both timely and expensive. In addition, if assets are placed in Trust, they cannot be used to repay outstanding debts of your beneficiaries including divorce and bankruptcy. In addition, these assets cannot be used to pay fro care home fees if they are placed in Trust depending on the creation of the Trust and the admission to care of the Settlor.

For more information on Wills v Trusts, contact us today.

 

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