Both wills and trusts are used for inheritance planning. The mechanics of their operation are quite different.
A will is arguably the simpler and cheaper option. However, wills are restricted by the national inheritance laws, first and foremost by the forced heirship rules. Regardless of the contents of the will, the testator has restrictions as to whom outside the close family to leave any of his assets. Based on the forced heirship provisions, the testator will not be able to disinherit his closest heirs – at best only to reduce their share. The protected heirs can easily overturn a will.
In contrast, a trust is much more flexible when it comes to how much, when, to whom and how a person’s assets are distributed. A well-constructed trust is also extremely difficult to overturn.
A will can only be effective upon the death of the testator. It can achieve nothing while the person is still alive. In contrast, most trust are what is called inter vivos trusts – trusts created during one’s lifetime and going into effect immediately after it’s signed.
A will typically goes into a court probate after the testator’s death, which can be lengthy and cumbersome. A trust does not need any court approval to be effective. Under a trust, the settlor can have anyone of his choice as a beneficiary, including himself for the time being. Thus, a trust can set in motion asset transfer and protection measures both during the life of the Settlor and carry on with yet further functions after the Settlor has passed.
Trust is generally a more universal tool than a will. A trust can include conditions such as age and other attainment provisions, parameters or methods and mechanisms on how the assets will be used, as well as how and when they will be distributed to the beneficiaries. Trusts offer a wide range of benefits, from protecting assets against creditors to facilitating business succession and distribution of one’s assets over time, to ensuring education for dependents.