Which is better when it comes to setting conditions for the division of your property and assets – a will or a Living Trust? Let’s find out how one differs from the other.
In India, people take pride in their close-knit family system. But to keep up with the changing times and rising expenses more and more people are branching out into nuclear families. Though a practical move for many, breaking up into individual families places ancestral property under dispute.
Everybody wants a piece of what their fathers and forefathers have amassed. Also, most of these disputes occur after the demise of the head of family. In such a situation, an absence of a will can create deep rifts among members of the family. On the contrary, a well-laid out will ensure that the division of property and assets is smoothly executed.
But is a will the only way to ensure that your assets are divides as per your wishes? No. Another way is to create a living trust. It offers more flexibility than a will and has many unique features.
Don’t know how a living trust works? Fret not. In this article we’ll talk about the differences between a will and living trust. You can then decide which one suits you best.
Bonus Read: 5 Must-Dos for End-of-Life Planning
What is a will?
A will is a legal document or a record of how you’d like your property and assets to be managed after your demise. Drawing up a will is important if you wish to ensure harmony among your family even after you’ve passed away.
So, how does creating a will help? A will states how you’d like your property to be divided among various members or non-members of your family after your demise. Remember, it is your decision and your decision only regarding who should own your assets and how they should be treated after your demise.
Simply put, a will states how your assets and properties should be treated, divided or allocated after your death. If you have minors under your care and are worried that they may get side-lined, you can mentions terms for their care in your will.
Remember those Bollywood movies where rich uncles and aunts leave mansions to their minor nieces and nephews, where the latter inherit the property at a certain age? Well, it’s true! Since minors cannot inherit property, you can state terms of care for them till they come of age, after which they can inherit the property legally. You can even assign a legal guardian to minors in your will. This is one among the many things you can state in a will.
Now, when you draw up a will you need to do it in the presence of a witness. A witness can be a trusted person. The signature of the witness will be present on the will and this person will ensure that your will is rightly enforced in your absence.
The witness is also the executor of your will. An executor has no legal authority over your property nor has any say regarding how your property is to be managed. He/she merely executes what’s stated in the will. When the creator of a will passes away, the will is taken to court for probate. This is followed by court proceedings where assets are allocated to people according to instructions in the will. In case of a dispute, the words of a witness hold good in court.
Drawing up a will is no longer a tedious task. In fact, you can now create a will online. While we are here, let’s talk about the different types of wills.
This is the most common type of will. It is created keeping all procedures and practices in mind. Essentially, it is created keeping all legal requirements in mind. It has a legal stamp and signature of witness(es) and hence holds up strongly in court. A testamentary will helps reduce disputes to a great extent.
It is similar to a testamentary will but without the back up of a witness. This is when you create a will, but don’t have a witness for it. This can spell trouble since, in case of dispute, there will be no one to vouch for the authenticity of its content.
As the name suggests, this will is verbally conveyed to a witness just like how tribes used to pass down lessons to the next generation in the form of stories. It’s all very interesting, but it’s unlikely anyone is going to remember the contents forever. That’s why an oral will isn’t the best choice.
This will is not just about laying down instructions about your properties and assets for a time after your demise. It can also be created to set instructions about what’s to be done if you find yourself mentally or physically challenged at some time in your life. You can set instructions about the money to be spent on your care should you find yourself facing mental or physical limitations.
Additional Reading: 5 Extremely Important Reasons To Consider Writing A Will
This is how wills work in a nutshell. Now let’s move on to a living trust.
About living trust
A living trust is a close cousin of a will. They essentially serve the same purpose with a few differences. As the name goes, when you opt for a living trust you place all your assets in a trust. This makes the trust the owner of all that is placed in the trust, but you have the legal rights to manage it till your death or till you wish to hand over the custody of it to a successor.
Unlike with a will, you do not assign an executor but you assign a successor to your living trust. The successor will take over as the legal manager of the trust after you and will oversee management of the assets therein.
Which to choose?
Now when the choice is between a will and a living trust, how do you decide?
A living trust has many advantages over a will. Opting for a living trust will save you the trouble of going to court, which is mandatory with a will. A successor can take over a living trust immediately, at any time, without too much hassle. A living trust does not need to be arbitrated in court, hence, the distribution of assets becomes a fast and easy process.
When you draw up a will, you might not want your entire family to know about its contents. If you seek this kind of privacy then a living trust is a better option. The contents of a trust are only made known to its beneficiaries or the heirs of the trust owner.
Only if someone questions the authenticity of the trust and takes it to court does a trust become public. On the other hand, a will has to go to court for it to be effective and hence can be read by anyone who wishes to know its contents.
There is another advantage of getting a living trust. A will can only be enforced upon the demise of the creator and proprietor of the will. However, the same is not true of a living trust. A living trust can be taken over and managed by your successor even if you are alive and kicking.
If you find yourself in a situation where you are physically or mentally ill-equipped to take care of the trust, you can hand over the reins to your successor or heirs. This, however, does not equate to distribution of assets. Even if a living trust is in place, the distribution of assets will take place only after the trust holder’s demise.
Additional Reading: 5 Crucial Questions To Ask While Writing A Will
Why should I get a will at all then?
We tend to build our assets over time. A will is a good option if you already have a trust in your name which does not mention your new assets. Other than asset allocation, there are details about the custody of your child/children which you might wish to specify legally. A will works better for such cases.
We understand that it’s not easy to decide which among the two to pick. You can opt for a will and a trust for different assets. If you still can’t decide then talk to a lawyer. They will hear you out and tell you which option goes best with which assets.
Additional Reading: How to create a will
If you are looking to buy a house we can help you with a number of Home Loan options. Once you have your own place, get a will or a living trust to secure it for your family.