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.
What is a Living Trust?
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 or other property
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.
Parts of 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.
What is a Will?
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 are the people that are inheriting assets.
- Instructions include how and when beneficiaries will receive the assets.
- Guardians are the people listed for any minor children.
Advantages of a Living Trust
Living trusts are similar to wills as they both provide instructions for how your estate will be distributed at your death; however, unlike a will, a living trust does not need to be “probated.” Probate is the process by which your name is legally removed from a property or asset after your death and ownership is placed in your beneficiary. This process can often be time-consuming, expensive, and at times, very contentious.
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, reach out to me to discuss your needs further.