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Understanding wills and trusts: part 1

Most people are familiar with wills as a way for people to share how they would like their estate distributed after their passing. However, a trust is another option to consider during estate planning that may help to reach the same result.

To select the best option, it is important for people to take time to compare the two. There are a couple of key facts to know about wills and trusts:

Will

A will is a document used to denote to whom or what organization they would like portions of their estate to go to. Will holders may make other designations within the will, such as the representative they want to administer the will at the appointed time, or guardianship for minors. Once a will is in place, the will holder is still able to make changes to it, if desired. However, any addition or modification to a will must abide by Virginia’s will laws. In the case of most wills, once the will holder passes, the will undergoes the probate process to begin the dissemination of the estate. After the process is complete, the will becomes public record.

Trust

A trust allows for the distribution of an estate like a will; however, it does so in a different manner. Once assets enter into a trust, they become separate from the rest of the estate. In fact, there are some trusts that parties may contribute to before death. Since the trust is a separate entity, it is not utilized for the payment of debts as the rest of the estate, so it does not have to undergo the probate process and does not become public record. Recipients should note that there might be separate taxes or fees on the trust itself.

These are a few key facts to know about wills and trusts. People should take time to understand these differences, as well as a few determining factors, when selecting the right option for their particular situations.

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