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Living Trust vs. Will:  What You Need to Know

 

 

 

When planning for the future, it’s essential to consider how your assets will be managed and distributed. Two primary tools for this purpose are living trusts and legal wills. Understanding the benefits and drawbacks of each can help you make an informed decision that best suits your needs and those of your loved ones.

 

 

What is a Living Trust?

 

A living trust is a legal document created during an individual’s lifetime that places assets into a trust for their benefit during their life, and specifies how these assets are to be distributed after their death. The person creating the trust, known as the grantor, can serve as the trustee or appoint another person or institution to manage the trust. This arrangement helps in managing and protecting assets both during the grantor’s lifetime and after their death.

 

 

Living Trust:   Pros & Cons

 

Benefits:

 

1. Avoids Probate:  One of the most significant advantages of a living trust is that it allows your estate to bypass the probate process. This can save time, reduce legal fees, and provide privacy, as probate proceedings are public records.

2. Continuity of Management:  If you become incapacitated, a living trust ensures that your assets are managed by a trustee of your choice without court intervention. This provides a seamless transition and consistent management of your assets.

3. Flexibility and Control:  A living trust allows you to specify detailed instructions for how and when your assets are distributed, which can be particularly useful for managing complex estates or providing for minor children or individuals with special needs.

4. Privacy:  Unlike wills, which go through probate and become public record, a living trust remains private. This helps keep your financial matters confidential.

 

Drawbacks:

 

1. Cost and Complexity:  Setting up a living trust can be more expensive and complicated than creating a will. It often requires the assistance of an attorney and might involve additional administrative tasks, such as retitling assets into the trust’s name.

2. Ongoing Maintenance:  To keep a living trust effective, you must continually update it and transfer new assets into the trust. Failure to do so can result in those assets being subject to probate.

 

 

Legal Will:  Pros & Cons

 

Benefits:

 

1. Simplicity and Cost:  Wills are generally simpler and less expensive to create than living trusts. They can often be prepared without the need for extensive legal assistance.

2. Specific Bequests:  Wills allow you to name specific individuals to receive particular items or assets. This is useful for making precise distributions.

3. Guardianship Appointments:  A will enables you to appoint guardians for minor children, which a living trust cannot do. This is crucial for ensuring your children are cared for by the people you trust.

4. Flexibility Until Death:  A will can be changed or revoked at any time during your life, providing flexibility as your circumstances or wishes change.

 

Drawbacks:

 

1. Probate Process:  One of the primary disadvantages of a will is that it must go through probate, which can be time-consuming, costly, and public. This process can delay the distribution of assets to your beneficiaries.

2. Limited Incapacity Planning:  Unlike a living trust, a will does not provide for the management of your assets if you become incapacitated. Separate documents, such as a durable power of attorney, are required to cover this contingency.

 

 

Which Is Right for You?

 

Choosing between a living trust and a legal will depends on your individual circumstances and estate planning goals. For instance,  if avoiding probate, ensuring privacy, and providing for potential incapacity are top priorities, a living trust might be the better option. However if simplicity, lower upfront costs, and the ability to appoint guardians for minor children are more important, a will could be more appropriate.

 

Many people find that a combination of both—a living trust for certain assets and a will for others—provides the most comprehensive solution. Consulting with an estate planning attorney can help you determine the best strategy for your unique situation.

 

Final Thoughts

 

Both living trusts and legal wills play vital roles in estate planning. Understanding their benefits and drawbacks can help you make informed decisions to protect your assets and provide for your loved ones. If you need assistance navigating these options, don’t hesitate to reach out to our probate property help team for guidance.

 

 

Disclaimer:  I am not an attorney and cannot provide legal advice. This article is for informational purposes only and does not constitute legal advice. If you need legal advice, you should contact an attorney. We can also direct you to a reputable estate planning attorney should you need.