When it comes to estate planning, wills and trusts have important but distinct roles in the handling and transferring of your assets. While the terms are often mistakenly interchanged, the two documents are unique tools used within an estate plan.

So, what’s the difference between a will and a trust?

What’s a Will?

A will, also known as a Last Will and Testament, is a legally enforceable document directing how you want your assets and property to be administered when you pass away. A will also names an Executor, the person who will administer your assets.

The key differentiator of a will is that it takes effect at death, requiring your family and heirs to go through the probate process.

Wills are the most common estate planning tool and have several key uses:

• Appointing an Executor
• Naming a guardian
• Naming a Trustee
• Providing for the creation of Trusts for a spouse or minor children

When creating a Will, it is important to be forthcoming with your attorney to help ensure that your assets are set up to be distributed as you intend.

Important Terms Associated with Wills

Probate asset
Anything that does not have a beneficiary designation or that does not pass by operation of law.

Non-probate asset
Passes outside of your Will and directly to the individuals.

Decedent
A person who has died.

Intestacy
The condition of an estate if a person dies without a Will.

What is a Trust?

A trust is a fiduciary relationship where the Grantor gives another party, the Trustee, the power to manage the grantor's property for the benefit of the beneficiary, who may be a Grantor or a third party.

Trusts can be used to lay out how a person’s money should be managed and distributed while they are alive, or after they have passed. In some cases, you may want to consider creating trusts for minors or spouses who you do not want to have direct access to your estate assets. This may be applicable for someone with a mental illness or substance issue.

For a Trust to work, it is important to retitle assets, not just create the documents. Your attorney may assist you in doing that.

Additional Ways to Pass on Assets

There are other ways assets can be transferred to beneficiaries aside from Wills and Trusts.

• Beneficiary Designation (Transfer on Death Agreements)
  Allows you to name beneficiaries of particular assets (e.g. IRAs and investment accounts)
• Joint Tenants with Right of Survivorship (JTWROS)
  All joint owners have equal ownership and assets are immediately allocated to remaining owners if one dies.

For your legacy to live on, it's important to wisely choose the tools that are appropriate for those wishes. How do you choose if you need a will, a trust, or both? We can help. Our team, including knowledgeable attorneys, can work with you to assess and work through your situation to create the appropriate documents.

Consult with an attorney or a tax or financial advisor regarding your specific legal, tax, estate planning, or financial situation. The information in this article is not intended as legal or tax advice.

Manning & Napier Personal Trust Services provided by Exeter Trust Company (ETC), a New Hampshire charted trust company and affiliate of Manning & Napier Advisors, LLC. Fiduciary trust and custody services are available through Exeter Trust Company.