What’s the Difference Between a Will and a Trust?
When it comes to the distribution of real estate property, a will and a trust have many key similarities and differences. This article uncovers how they compare.
Have you ever wondered why there are several ways to distribute ownership of property such as a will or a trust?
Two of the most common methods for distributing real estate are through a will or a trust. While the two may seem to overlap with similarities, there are actually several key differences. In this article, we’ll discuss how you can complete the sale of a home in a trust and more.
Understanding the purpose of a will
A will is a legal document that allows you to control what happens to your property and possessions after you pass away. You can use a will to designate who will receive your property. A will also gives you the right to name an executor. This is a person or institution responsible for carrying out the provisions of the will. It allows you to appoint a guardian for children who are minors as well.
While a will is not a legal requirement, it can save your loved ones from complications. For example, if you pass away without one, state law will determine how your property is distributed. This may not be how you would have wished to have a particular property be left behind.
Understanding the purpose of a trust
A trust is a legal arrangement in which someone (the trustee) holds property or assets for the benefit of another person (the beneficiary). There are several different types of trusts, but the most common forms are
- Revocable trusts can be modified or terminated at any time by the person who created the trust (the grantor)
- Irrevocable trusts cannot be modified or terminated once they have been created
Trusts can be used for a variety of purposes, such as avoiding probate, minimizing estate taxes, and managing assets during incapacity. Probate is the legal process of distributing a person’s property after they die. If you have a trust, your trustee can shift your assets to your beneficiaries without going through the probate phase. It can save time, costs, and headaches trying to determine a beneficiary.
Another common use for trusts is to minimize estate taxes. When a person dies, their estate may be subject to federal and state estate taxes. If the value of the estate is over a certain amount, the executor may have to pay taxes on it. However, if the deceased person’s assets are held in a trust, they may not be subject to estate taxes.
Key differences between a will and a trust
It’s important to note that wills and trusts serve different purposes. You can have both a will and a trust, or just one or the other. A will takes effect after you pass away, whereas a trust takes effect as soon as it is created.
The will must go through probate, while a trust does not have to go through the process. Instead, a trustee will distribute property according to the terms in the trust. A will is more flexible because it can be changed at any time, while the terms of a trust stay in place once it has been made. Finally, a will only covers property and possessions, while a trust can cover things such as stocks, bonds, and other types of assets.
How to sell a house in a trust
It’s always prudent to seek legal counsel before making a big decision like selling a house in a trust. If you own a house that is held in a trust, selling the property may seem tedious. The process is similar to selling any other property, but with several additional steps. First, you will need to get the permission of the trustee to sell the property. They have full power to make choices about the trust’s assets, including whether or not to sell them.
After securing permission, you will need to list the property for sale. This can be done through a real estate agent, however, it’s worth considering selling off market. By utilizing a marketplace, such as Sundae’s, you have access to buyers around the country. All without the hassle of selling on the Multiple Listing Service (MLS).
Once you have found a buyer, you will need to negotiate a purchase price and sign a contract that documents the sale. When the sale has been initiated, court approval is required. Trusts are regulated by state law where the sale of the property is done in accordance with the terms of the trust. After the sale has been approved by the court, you will need to transfer the title of the property to the person buying the property. This can be done through a title company or an attorney. Before the sale is completed for good.
Selling with success
A will and a trust minimize the complications of property distribution, but can still feel complicated if you’ve inherited this situation. If you’re looking to sell your real estate property smoothly while it is in a trust, you can be confident that Sundae has experience selling homes of all types in a variety of situations. Sundae is a one-stop-shop where home sales are simplified using an auction style selling process. Sundae has no seller fees and allows homeowners to often compare cash offers. That way, you can maximize profit and make the sale fast.