Probate vs Trust
Probate and trusts are two different legal mechanisms used in estate planning and the transfer of assets upon an individual's death. Understanding the differences between probate and trusts can help individuals make informed decisions about how to structure their estate plans.
What is Trust?
A trust is a legal arrangement in which a person (the settlor or grantor) transfers assets to another party (the trustee) for the benefit of one or more individuals or entities (the beneficiaries).
Trusts are established for various purposes, often as part of estate planning, to manage and protect assets, and to facilitate the transfer of wealth to heirs. The trust document outlines the specific terms and conditions under which the trustee manages and distributes the assets.
There are several types of trusts, each serving different purposes.
Common types include:
Revocable Living Trust: The settlor retains the ability to modify or revoke the trust during their lifetime. It often becomes irrevocable upon the settlor's death.
Irrevocable Trust: Once established, the terms of this trust generally cannot be altered or revoked without the consent of the beneficiaries.
Testamentary Trust: Created through a person's will and only takes effect upon their death.
Charitable Trust: Created to benefit a charitable organization or cause.
What is a Probate?
Probate is the legal process through which a deceased person's estate is settled and distributed to their heirs or beneficiaries. The primary purpose of probate is to ensure that the deceased person's assets are distributed in accordance with their will or, in the absence of a will, according to the laws of intestacy (laws that dictate how an estate is distributed when there is no valid will).
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