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Trust vs Will
Most people are under the impression that estate planning is simply writing out a Will and the necessary trusts, should they have assets to pass down. Others believe that estate planning is only for the exceedingly wealthy. However, there’s a lot more to estate planning than just making arrangements for your assets. It’s also not something that only wealthy people have the luxury of doing. Essentially, if you own a home or another property, run a business, hold shares in a company, have possessions from family heirlooms to vehicles, and have a family to answer for. Then, you have several reasons to plan your estate.
What is a Will?
A Will is a written document expressing a deceased person's wishes, from naming guardians of minor children to bequeathing objects and cash assets to friends, relatives, or charities. A Will becomes active only after one's death.
What is a Trust?
A trust becomes effective on the day it is created, and the Settlor (i.e. the asset contributor) specifies how his assets shall be distributed. In contrast to a Will, which is only effective following death, a Trust is effective prior to and following death. In the case of irrevocable trusts, which are often created for tax purposes and cannot be altered without the consent of all beneficiaries, and revocable trusts (sometimes we call living trusts), which can be changed anytime by the Settlor.
Trust and Will have the same essential function- passing your property to your heirs after death. Legally, they do the same things. Generally, people may think trust is only for wealthy people, but the benefits that Trust can offer are far more than we can expect.
What are the differences between a Trust and a Will?
- Probate Whether you have a Will or not, a probate is required from a court to administer the Deceased’s estate. In Hong Kong, the probate usually takes about 5 to 7 weeks on average. However, if the application is not simple and straightforward and/or the nature of the estate is complicated, the length of time required may be longer, especially if the person dies in some countries it is harder to obtain a death certificate. Besides, a Will may be challenged by the deceased’s family members or creditors (e.g. due to stress or mental incapacity, etc) on its validity.
- Privacy A Will passes through probate when the property involved is solely in the name of the deceased, to ensure that the dead person’s will is actually carried out. A Will will go public due to circumstances.
- Flexibility A Will is more like an at-one-go, where the executor distributes everything at once in accordance with the Will. One problem is that there is no rule or regulation to direct the executor, which leaves the beneficiaries with little protection if they follow the Will.
- Consolidation of assets
A Trust does not require the legal formalities of probate and there is less opportunity for its validity to be contested if the trust is legally set up within a certain period of time. Trust saves the hassle of a long process of probate and eliminates the potential legal and time costs.
A Trust is a private record that is very attractive for those looking for privacy. Meanwhile, a trust does not pass-through probate at any time. A court does not need to oversee the process because there is already a trustee appointed to do this. Trust can always remain private on the assets and identity of one who set it and the beneficiaries who benefit from the assets.
Trust can be set up in different structures depending on the location of assets and what clients wish to achieve. Clients can decide who can benefit (i.e. who are the beneficiaries), and when and how to distribute the assets to the beneficiaries through a document called a Letter of Wishes. Clients can change their wishes anytime. Trust can maintain in legacy.
The succession to "immovable property" (e.g. flat, building, land) is governed by the law of the place where the property is located. That means a Will shall prepare in the countries where you have immovable property. You cannot put all kinds of assets in one Will.
a Trust accepts any kind of assets into a trust, as long as the assets can be held by an offshore entity and the location of the assets allow the structure of holding. The client can consolidate all assets in one structure, easy to view and it’s secured to manage by a licenced trust company.
Trust and Will- which one is better?
Trust is recognized as the best tool for estate planning. However, whether you shall consider either setting up a Trust or Will depends on what you wish to achieve, your purpose, your domicile, the location of assets etc. For example, a trust would be a better choice if you are planning to pass assets down to a subsequent generation. Among the key benefits are privacy, asset protection, saving time and legal challenges, and asset consolidation.
No matter whether you choose a will or a trust, you should seek professional advisors' advice (tax, investment, and legal). Our team — UniTrust has extensive experience in dealing with trust issues and matters. If you need further advice on setting up a trust or on the above subjects, get in touch with us to know more.
信託 vs. 遺囑
在一般人的普遍認知中，資產的傳承規劃只限於遺囑和必要信託的書面撰寫。 另一部分人則認為，遺產規劃是富人的專利。 然而，遺產規劃不僅僅是為資產作出安排，更不僅是富人的專屬服務。 從本質上講，您只要是擁有銀行帳戶之餘，也有房產、經營企業、持有公司股份、擁有家傳財富、車輛等財產，且需要照顧家庭。 遺產規劃便再適合您不過了。
信託自創建之日起生效，其中資產的分配方式由委託人（如資產出資人）指定安排。 而與僅在死後才生效的遺囑不同，信託在生前和死後均有效。 以不可撤銷信託為例，其通常是出於稅收目的而設立，未經所有受益人同意不得更改，而可撤銷信託（有時我們稱為生前信託）可以由委託人隨時更改。
信託和遺囑具有相同的基本功能——在您去世後將您的財產傳承給您的繼承人。 從法律上講，他們的功能是相同的。 通常，人們可能認為信託只是富人的專利。但其實，信託所能帶來的好處遠超我們的想像。
- 遺囑認證 無論您是否有遺囑，都需要法院進行遺囑認證以管理往生者的遺產。 在香港，遺囑認證通常平均需時 5 至 7 週。但是，如果申請程序和/或遺產性質複雜， 或往生者死亡的國家較難獲取死亡證明，所需時間可能會更長。 此外，遺囑的有效性亦可能會受到往生者的家人或債權人的質疑（例如因壓力或精神上無行為能力等）。
- 私隱 當涉及的財產是往生者名下，遺囑便需進行遺囑認證，以確保其遺囑得到落實執行。在某些情況下，遺囑會被公諸於眾。
而信託是一種個人記錄及安排，可有效保障資產的私隱性。 同時，信託無需進行遺囑認證。 信託可以提供資產和信託設立人（即委託人）的身份保密，以及資產受益人高度的私密性。
信託可因應客戶的意願及資產類別及所在地而設立不同架構， 客戶可以透過意願書決定誰可以受益（即誰是受益人），什麼時候分配及資產分配方式。 客戶可以隨時改變意願。
「不動產」(例如公寓、建築物、土地) 的繼承權受資產所在地的法律管轄。 也就是說，遺囑需在不動產的所在地設立。 故此，您不能將所有類型的資產放在同一份遺囑中。 信託則可接受任何類型的資產，只要資產由離岸實體持有並且持有結構受資產所在地區允許。 客戶可以將所有資產整合至同一結構中，便能易於查看，並由持牌信託公司安全管理。
無論您選擇遺囑還是信託，您都應該尋求專業顧問咨詢 (稅務、投資和法律)。我們的團隊 — UniTrust 在處理信託問題和事務方面擁有豐富的經驗。 您若需獲取更多設立信託或上述方面的建議，請聯繫我們了解更多信息。