What Is The Difference Between A Will And A Trust?
Absa Kenya held another Webinar on Tuesday, November 24, 2020, on investments, Trusts, and Succession Planning, to enlighten customers on how to think of both the present and the future in terms of the investment plans.
Of interest, was the difference between a Trust and a Will? What does an investor get by having a Trust and what is the importance of having a Will? Many people around the country often see no need of having a will. Experts think differently.
A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary.
Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.
In finance, a trust can also be a type of closed-end fund built as a public limited company.
A will is a legal document that sets forth your wishes regarding the distribution of your property and the care of any minor children.
If you die without a will, those wishes may not be carried out. Further, your heirs may be forced to spend additional time, money, and emotional energy to settle your affairs after you’re gone.
Wills can vary in their effectiveness, depending on the type, though no document will likely resolve every issue that arises after your death. Here’s what you need to know about these vital documents.
According to Absa Kenya, a Will is a legal declaration by a person of their wishes or intentions regarding the disposition of their property after their death. Absa says Wills can be either Written or Oral. An Oral Will is made in presence of at least two competent witnesses and valid for three months from the date made.
Why must one have a Will?
- To maintain control of the property after death
- To avoid/minimize disputes upon death
- To avoid the rule of intestacy
- To appoint guardians for young dependants
- To create trusts over assets where needed to prevent waste
A Trust is versatile and flexible – various structures can be adopted and assets settled into the trust as time goes by. A will, on the other hand, is in strict compliance with the succession law.
Trusts are meant to last under assent protection and preservation while a will is for immediate disposal. For a Trust, there is the application of succession management too that is outside the succession law while a Will has dictated succession.
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