When it comes to estate planning, many people are confused about whether they should opt for a living trust or a will. Both options have their pros and cons, and it can be challenging to determine which one is right for you. In this article, we will compare living trusts and wills, and discuss the key differences between them. Our goal is to help you make an informed decision and choose the estate planning option that best meets your needs.
What is a Living Trust?
A living trust, also known as a revocable trust, is a legal document that allows you to transfer your assets to a trust during your lifetime. You are the trustee of the trust, which means you retain control of your assets. You can add or remove assets from the trust, and you can change the terms of the trust at any time. Upon your death, your designated successor trustee will manage and distribute the trust assets to your beneficiaries according to your instructions.
What is a Will?
A will is a legal document that outlines how you want your assets distributed after your death. It can also name a guardian for any minor children, and designate an executor to manage the distribution of your assets. A will only takes effect after your death and must go through probate, which is a court-supervised process that ensures your debts are paid and your assets are distributed according to your wishes.
Living Trust vs. Will: Key Differences
One of the biggest differences between a living trust and a will is the probate process. When you have a living trust, your assets are transferred to the trust, which means they are no longer in your name. Therefore, when you die, there is no need for probate because your assets are already in the trust. This means your beneficiaries can receive their inheritance faster and without court supervision.
In contrast, a will must go through probate, which can be a lengthy and costly process. During probate, your will is validated, your debts are paid, and your assets are distributed according to your instructions. Probate can take anywhere from several months to several years, and the costs can eat into your estate.
Another advantage of a living trust is privacy. Because a living trust is not a public record, your estate plan remains private. This means that your beneficiaries, assets, and distribution plan are kept confidential. In contrast, a will is a public record, which means anyone can access it and review its contents.
A living trust provides you with more control over your assets than a will. With a living trust, you can manage and control your assets during your lifetime. You can change the trust terms or dissolve the trust at any time. You can also designate a successor trustee to take over management of the trust in the event of your incapacity.
In contrast, a will only takes effect after your death, and you have no control over your assets once you pass away.
While a living trust may be more expensive to set up than a will, it can save money in the long run. A living trust can help you avoid probate, which can be costly. Probate costs include court fees, attorney fees, executor fees, and appraisal fees. These costs can add up, especially if your estate is large. In contrast, a will must go through probate, which means that your estate will be subject to probate fees and costs.
Living Trust vs. Will: Which Option is Right for You?
Deciding between a living trust and a will is a personal decision that depends on your individual circumstances. If you have a large estate, a living trust may be the better option for you, as it can help you avoid probate issues.
This article was published by a third party and is intended for general informational purposes only and does not necessarily represent the views of Legacy Assurance. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal or financial advice. You should consult with an attorney regarding any questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about a living trust vs will and other estate planning matters, visit our website at legacyassuranceplan.com.