When it comes to estate planning in Scotland, two key instruments often come up: wills and trusts. Both are used to determine how your assets will be distributed after you pass, but they do not do the same things. The differences between them need to be understood to create a well rounded estate plan. If you need legal expertise to help you decide which option is best for you, then solicitors in Scotland can help.
Understanding Wills: The Basics
A will is a legal document that tells people how to distribute a person’s assets after they die. It is a very simple estate planning tool, in that it tells you who gets what, whether it is money, property or personal belongings. A will, however, only comes into effect after the individual has died, and assets have to go through a process called probate before they can be distributed.
What Are Trusts? A Different Approach
A trust is unlike a will in that it’s a legal arrangement in which one person—the trustee—holds and manages assets on behalf of another, the beneficiary. This trust comes into effect immediately when it is created and assets can be distributed before the individual’s death. Trusts help to set out how assets should be used and can benefit specific individuals or organizations.
Key Differences: Timing of Distribution
The biggest difference between a will and a trust is how the assets are distributed. Probate can take several months or even years, and only a will goes into effect after probate. On the other hand, a trust allows for assets to be distributed immediately, even before death, as long as the trust is active. It is especially useful for those who wish to guarantee that their loved ones can access their assets as soon as possible.
Flexibility in Estate Planning
Trusts may be more flexible but are often harder to create than wills. A trust allows you to specify conditions under which assets are to be used. For instance, from a child’s point of view, a trust may be set up to permit the appropriation of the fund for the purposes of education but not for other things. Trusts also allow for assets to be managed for an extended period of time, something that may be helpful for somebody who just wants to ensure that assets are distributed out over decades or more.
Control Over Asset Distribution
A trust provides more control over how assets are distributed, whether the individual wants to limit access to certain assets until the conditions are met. For example, a person can create a trust that outlines when a beneficiary should receive their inheritance, e.g. when they reach a certain age or after completing a particular achievement, for instance, after graduating from university. A will, however, doesn’t offer the same level of control, because assets are distributed upon death.
Protecting Privacy with Trusts
Trusts have a real advantage in terms of privacy compared to wills. A will goes through probate, so it becomes part of the public record. That means that anyone can see how your estate is divided and what it’s worth. However, trusts are private documents that don’t have to go through the probate process. This ensures that people do not have to divulge their affairs, which could be especially important for those with large estates.
The Role of Solicitors in Scotland
Creating both wills and trusts is a legal process with certain complexities. That is why it is a smart idea to seek professional advice from solicitors in Scotland. However, a solicitor can help you decide what is best for you in terms of a will or trust depending on your own circumstances, family dynamics and your financial situation. They can also help draft the document, make sure it is legally sound and is exactly what you want.
When to Choose a Will
For those with relatively simple estates, or who want to make their assets go to specific people in a straightforward way, wills are often the most appropriate choice. A will will likely be all you need if your primary goal is to make sure that your estate goes to your beneficiaries in the way you want.
When to Choose a Trust
In general, trusts work best for people with complicated estates or who want to protect assets from, say, creditors or tax liability. Secondly, they are useful for those who wish to manage how and when their assets will be distributed, for example, a case of a minor child or a beneficiary with a disability.
Combining Wills and Trusts
Sometimes people use both a will and a trust. For instance, a will can be utilized to address any residual assets which weren’t incorporated into the trust. The combination of the two instruments gives a comprehensive estate plan which addresses a wide range of issues and offers greater flexibility in the distribution of assets.
Making the Right Choice for Your Estate
If you’re creating a robust estate plan, understanding the differences between wills and trusts is key. When you work with solicitors, you can ensure that you make the choices that you want and that your loved ones can have peace of mind. No matter whether you choose a will, a trust or a blend of both, professional advice means your estate is managed as you want it to be and your legacy is secure.
