Estate Planning: Will vs Living Trust
Estate planning is a vital and sometimes confusing task that must be addressed at some point in life. It involves guiding your assets and property after death or incapacitation. While a will is a commonly used method of estate planning, at times a living trust is a more advantageous option. In this article, we will discuss the differences between these two legal documents and when each is appropriate.
What is a Will?
A will is a legal document that outlines a plan for the distribution of one’s assets after death. The person drafting the will is referred to as the testator. The will has a designated executor, who is responsible for the distribution of assets according to the testator’s directives after their death. Additionally, the testator may identify a legal guardian for their minor children or dependents.
The executor has no say in managing the assets until the testator’s death. After the testator’s death, the estate goes through probate, a court process where the will’s instructions are followed by the executor. The probate court will distribute assets according to the executor’s directives.
What is a Living Trust?
A living trust is a legal document that places all of one’s assets in a trust. The trust acts as a separate legal entity, where the testator establishes themselves as the trustee. The rights to manage the assets in the trust remain with the trust’s grantor until death or incapacitation. The Trustee will select a successor trustee to take control of the trust’s assets should the grantor become incapacitated, or in the event of their death.
The living trust is a revocable trust, meaning the grantor can modify or revoke it at any time. Trusts help you streamline the probate process because, upon death, the successor trustee can immediately take charge of the trust. Consequently, there is minimal interference from the probate court or other legal personnel.
Which is Right for You?
The choice between a will and a living trust depends on an individual’s needs, goals, and financial status. Steve Bliss, a probate and estate planning attorney, states that one advantage of using a living trust is that it can avoid Probate Court. This is because the trust’s successor trustee can take immediate control of the trust’s assets should the grantor become incapacitated or pass away.
While a will provides a level of control over the assets after one’s death, it must go through probate, which takes time and incurs costs. Moreover, a living trust offers privacy since the trust document is not made public record. The only exception is if a lawsuit is filed against the trust’s validity.
A living trust is also preferable for individuals whose assets are substantial, have multiple properties, or beneficiaries with special needs. Trusts offer flexibility in managing assets and allow for the creation of specific terms for the distribution of assets. A will may be sufficient if you have a smaller estate or have fewer assets to manage.
Does Having a Living Trust Mean You Don’t Need a Will?
Having a living trust does not mean that you do not need a will. Some states require that issues regarding the custody of children be addressed in a will and not in a trust. Moreover, if the grantor owns other assets not covered by the trust, the will is used to manage their distribution.
How to Decide
Deciding on which estate planning instrument to use can be challenging, especially for those not conversant with the legal jargon. Consulting with a legal professional specializing in estate planning and probate can help clarify the best option for your situation. They can guide you through the process of drafting and managing your will or living trust, as well as update them as your circumstances change.
Estate planning is an essential part of life, and it is often challenging to know where to start. A will and a living trust are two legal instruments that help guide the distribution of assets upon death or incapacitation. Each has its advantages that depend on an individual’s needs, goals and financial status. While a will provides some control over assets, a living trust can help avoid probate court, provide privacy, and offer flexibility in managing assets. In either case, it is advisable to seek the guidance of a legal professional in making an informed decision that secures your assets and protects your loved ones.