To know about difference between a Will and a Trust is essential for protecting your possessions and making sure your loved ones are taken care of. A Will is a simple document outlining your wishes regarding your property after your death. Conversely, a Trust Registration or trust oversees your possessions both during and after your lifetime. Being familiar with the intricacies of these legal instruments is not only useful, but also ensures that your objectives are implemented effectively. To guide you, let’s examine the fundamentals of wills and trusts and the major difference between a Will and a Trust.
What is a Will?
It is a formal declaration or legal document that is created by a person (called “testator”) while they are still living to carefully prepare how they want their properties and assets to be distributed. A testator may appoint an executor of the will, who executes the testator’s desires (in form of a will) after their death. It enables the heirs and survivors to receive the assets of the deceased in accordance with their specific desires, without any disagreements and the need for court involvement.
If there’s no will, the law steps in to decide who gets what among the rightful heirs of the deceased person. Wills made by Hindus, Buddhists, Sikhs, and Jains are governed by the law that is known as the Indian Succession Act, 1925. In contrast, Muslims are not bound by this act and can distribute their property according to Muslim Law. In order to understand the difference between a will and a trust, it’s important to learn about will and trust separately, hence we discussed it here.
What are the Key Essentials of a Will?
The testator must be of sound mind, at least 18 years old, not disqualified by law, and the will must be made voluntarily without coercion or undue influence. Further, a legally valid will needs:
- To clearly identify the testator, emphasize its necessity, and affirm their sound mind, voluntary intent, and absence of coercion during its creation.
- Use of precise and unambiguous language to indicate the distribution of the estate, detailing bequests.
- Inclusion of the executor’s details, which may include name, address, etc.
- Signature of testator in presence of two witnesses.
- An attached schedule of the respective properties.
Is the Registration of a Will Mandatory?
While its not obligatory to register a will, it is still recommended to opt for registration for enhanced precautionary measures, which include:
- Serves as a public record, providing stronger evidence of the testator’s intentions and preventing disputes among legal heirs.
- Imparts legal recognition and authenticity.
- Prevention from loss, damage, tampering and forgery.
What is a Trust?
It is also a legal arrangement created via trust deed by a person (called “settlor” or “author”)
transfers property to another person or an institution (called “trustee”) for the benefit of certain
individuals or a class of individuals, known as the beneficiaries. Trustees are responsible for diligently managing trust property, adhering to the settlor’s intentions, and providing periodic accountings to beneficiaries.
Trust property includes both movable and immovable items. Immovable property requires a formal instrument transfer, while moveable property can be delivered without a formal document. The Indian Trusts Act, 1882, governs trusts in India, covering private, public, charitable, and specific purposes, providing a legal framework for their creation, operation, and dissolution. In order to understand the difference between a will and a trust, it’s important to learn about will and trust separately. That is why trust is discussed here.
What are the Key Essentials of a Trust?
It can be created by any party competent to contract, including individuals, AOPs, HUFs, and
companies. However, if the trust is intended for a minor, approval from the Principal Civil Court of original jurisdiction is necessary. A legally valid trust includes:
- A lawful purpose, adheres to property transfer formalities, and indicates certainty.
- The trustor must be legally competent, and the beneficiary must possess the ability to hold the transferable property.
- Trustee’s acceptance to trust.
What are the Key Difference Between a Will and a Trust?
Some of the key difference between a Will and a Trust are discussed below, in order to understand the key difference between a Will and a Trust, go through the table given below:
| Particulars | Will | Trust |
| Legal Instrument | Wills outline distribution of one’s assets after their demise. | Trusts involve transferring of assets to a trustee for the benefit of specified beneficiaries during their lifetime or after death. |
| Property Types | Will encompass all assets, including real estate, bank accounts, andpersonal belongings | While the trust manages and distributes specific assets like real estate or investments. |
| Probate Process | Wills go through a probate process (where the court validates and executesthe terms of the will) which is time-consuming and involves court fees. | When set up correctly, trusts can frequently avoid the probate procedure, facilitating a more expeditious and private distribution of assets. |
| Privacy | Wills become public records after probate, allowing anyone to access informationabout the deceased person’s assets and beneficiaries. | Trusts are private in nature, as they may remain confidential, keeping details of asset distribution and beneficiaries out of the publicdomain. |
| Immediate Effect | Wills become effective upon the death of the testator, and their terms are not applicable during the person’s lifetime. | Trusts can be designed to take effect during the lifetime of the person (living trust), providing flexibility in managing and distributing assets both before and after death. |
| Contestability | Wills are more prone to legal challenges, known as will contests, resulting in delaying of the asset distribution. | Trusts are generally more challenging to contest, offering a higher level of asset protection and minimizing the likelihood of legal disputes. |
| Flexibility | Wills offer less flexibility than trusts, especially if changes need to be made frequently. They require formal amendments. | Trusts are more adaptable, as amendments can be made without the same formality as wills. |
| Revocability | Wills are revocable and can be altered or revoked by the testator during their lifetime. | Trusts can be either revocable or irrevocable. A revocable trust allows the settler to make changes, while an irrevocable trust, once established, is difficult to modify. |
| Complexity of Administration | The administration of a will can be relatively straightforward. | Trust administration may involve more complexities. |
| Incapacitation | Wills do not protect assets in case of incapacitation | Trusts offer protection for assets while the individual is alive and incapacitated. |
Conclusion
It is essential to know about difference between a will and a trust for anyone considering estate planning. Both legal agreements serve the common purpose of managing and distributing assets, yet they operate in distinct ways. A will, which is posthumously executed after the owners death, outlines posthumous asset distribution wishes, while a trust, created immediately, begins asset management during the owners lifetime. When navigating the choice between a will and a trust, individuals must weigh the advantages and disadvantages of each. Both are common choices, but choosing the right one depends on personal circumstances and preferences, ensuring it aligns with individual needs and goals for asset distribution and management. This blog regarding the difference between a will and a trust, makes your choice between them easy.
