I work with my clients to decide between writing up a trust or a will. I make it my goal to sit down with you or your loved ones to go through the process to choose which one is best for you. Learn more about the difference between the two, I am happy to sit down with you to discuss your options.
A living trust is a document that you create with a lawyer during your lifetime. You can also choose to fund this throughout your life or leave it unfunded. A trust becomes the legal owner of all your assets or some of them—you decide. You can also choose to retitle different assets such as:
- Bank accounts
- Brokerage accounts
- Your house
If you choose to retitle, you will no longer be the owner of those specific assets. The new owner will be the trustee of the trust.
What is in a Living trust?
There are a few different parts that are in a living trust. Due to the possibility of having a lot of different things on the trust, there will be management provisions. The trust can say that upon your death, the trust will end, and assets will be distributed to the trustee and beneficiaries. It could also say, that it will continue to hold assets until a certain time, the creator can write just about anything in the document to ensure what they want to happen happens.
A will is a binding statement directing who will receive your property at your death. It will appoint a legal representative to carry out your wishes. One note is that a will only covers probate property. There are many different types of property or forms of ownership that pass outside of probate.
- Jointly owned property
- Property in trust
- Life insurance
- Property with a named beneficiary such as IRA or 401k plans
All your assets can be directed to where and to whom you want your will to go to after you die. If you die without a will then your estate will be distributed according to your states law.
What is in a Will?
In a will, it includes the
- Executor– is the person that will carry out your will.
- Beneficiaries– people that are inheriting assets.
- Instructions– this includes how and when beneficiaries will receive the assets.
- Guardians– this is a name listed for any minor children.
Advantages of a Living Trust
A living trust and a will are very similar, but they also have some differences. They both provide instructions for how your estate will be distributed at your death. However, unlike a will, a living trust doesn’t need to be probated. It is significantly easier to transfer assets to your beneficiary because no court intervention is required. A living trust helps avoid the inconvenience and complexity of probate because ownership of the property or assets have already been transferred prior to death. Another added convenience by a living trust is the ability to transfer full ownership of your property and assets but continue to use them throughout your lifetime.
Do you have more questions about a will or trust? I urge you to look at you to learn more about estate planning with my blog, Three Common Estate Planning Mistakes. I want to make sure that you are provided with the best information, contact me to discuss your needs further.