Are you retired and planning for your future? A big part of that process as you get older is making a plan for your assets when you die and RJZ Law Group can help with the estate planning process. When you approach the process, you will be confronted by a myriad of legal terms – trust, estate, probate, conservatorship and many more. We are here to help and a common question we get is – what are the differences between a trust and estate? Here is a quick breakdown of key differences created by the RJZ Law Group.
How Are a Trust and an Estate Different?
Do you have property, money and assets you want your family members to inherit? Trusts and estates are both legal processes that will transfer ownership of your assets to specific heirs and beneficiaries – but they do it in different ways. An estate is a one-time transfer of assets after death. A trust allows you as the creator of the trust to arrange a continuous transfer of property before and after death.
Here is a better look at how each legal process can help you plan your future and how the RJZ Law Group can help you navigate the legal waters.
What Is a Trust?
A trust creates a legal relationship between the Grantor, the Trustee and the Beneficiary. Within the structure of this relationship, the grantor (property owner) gives control of the distribution of their assets to a legal trustee – who will distribute the assets to the beneficiary or beneficiaries at the appropriate time. There are many different types of trusts that vary based on the structure, beneficiary and length – but the two primary categories of trust are revocable and irrevocable. After the grantor transfers the assets to the trust, the trustee has the responsibility to distribute the assets, follow the guidelines of the trust, file taxes, report to beneficiaries and protect all assets. A trust works as a part of the estate in many cases.
What Is an Estate?
When you approach the estate planning process, you may ask – what is an estate? An estate is essentially all of your property and assets – home, cars, valuables, real estate, bank accounts, life insurance and other possessions. Your estate plan will ensure that your assets are distributed according to your wishes after your death. Your estate will include personal and financial guidelines versus a trust, which focuses just on the financial aspect. Medical, end-of-life directives are included in the estate and take effect in the event that you are unable to make the decision yourself.
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