You have worked hard to secure your future and those of the people you love. You want to control what happens to your assets after you die.
There are several approaches to making sure your assets are dispersed consistently with your requests.
Maybe you have heard of these two legal instruments, but no one ever explained how they are different to you.
So, what is the difference between a living trust vs. will?
Read further to find out which approach to estate planning is best for your situation.
What Is a Trust?
These tools are sometimes called living trusts because they provide both before and after death asset management.
A living trust allows you to specify where your assets go and when your heirs can access them. You can also use a living trust to manage your property in the event you become injured or disabled and cannot do it yourself.
Living trusts are categorized as either revocable or irrevocable. A revocable trust means you can change the terms any time during the grantor’s life. Irrevocable trusts require you to permanently surrender any rights to revise the trust after it is established.
What Is a Will?
A will is a written legal document that specifies how you want your assets dispersed after you die. A will can be canceled as well as revised at any time during your lifetime. Wills identify a guardian for your kids in the event of your untimely death.
Will vs Living Trust; What’s the Difference?
Both wills and trust are similar in that they address your plans to distribute your property once you die. Before you choose one, study these following differences to find which works better for you:
Probate Court Proceedings
Wills are subject to probate court proceedings. Probate is a division within the judicial system that ensures that a deceased person’s property is allocated to the right beneficiaries. The court will also make sure that the deceased’s debts are all paid off.
Public Disclosure of Information
Certain cases filed with a court system can be viewed by the public. Probate cases are one of them. When a will is submitted to the court, anyone case request to see the filing at the court clerk’s office and view what’s included.
Information included in living trusts stays confidential. Only beneficiaries who have access to trust files can see this information.
Living Trust vs. Will: Which One is Best?
So which method is best for you? Here are some considerations that might influence your decision:
If you are married, wills can transfer your assets to your spouse. If you have young children, a will can transfer their guardianship if both parents pass away.
Current Health/Age Status
Living trusts are not necessary for those who are healthy and at middle age. They set parameters to manage your care and property in case you are not able to.
Managing a living trust can be a big time commitment. Living trusts can only disperse assets that you actively place into it. You must continually change legal ownership of all your assets like your cars, bank accounts or businesses to the name of the trust.
Types of Assets
If you own a business or other enterprises, you do not want to tie up operations while probate matters are finalized. Sometimes probate cases can take years to settle.
Are you planning your estate? If so, check out these helpful estate planning worksheets to help you through the process. If you are still unclear about a living trust vs. will, give us a call.