What is the difference between an estate and a trust?

An estate and a trust are two legal concepts that are similar yet distinct. An estate is a legal term for the possessions and wealth owned by someone who has passed away. This includes any property, cash, financial accounts or items of personal value. A trust is a legal entity set up by the person who has passed away, or a designated third party, to manage and distribute the assets of an estate. A trust is created to provide structure to the financial process after death, as well as ensure that the wishes of the deceased are met. The difference between an estate and a trust is that an estate contains the possessions and wealth of the deceased, while a trust is a legal institution that manages the wishes of the deceased. An estate is only created upon the death of the individual, while a trust can be created before death if the individual wishes. Additionally, while a trust can manage both assets and liabilities, an estate only contains assets. In Virginia, when a person passes away, probate law requires that the estate of the deceased be divided among the heirs and processed through the court system. The estate assets are distributed according to the state’s laws. However, a trust can be used to bypass probate and provide more of a direct and private method of distributing the estate assets.

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What is the difference between an estate and a trust?

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