Are you looking for the difference between a living trust and a will? Check out this side-by-side comparison
Estate planning is an essential part of ensuring your assets are protected. Though it can be a tough subject to approach, doing so will make things easier for your loved ones down the road.
There are numerous ways to go about safeguarding your assets, but wills and living trusts are the most common estate planning tools. While anyone could technically draft their own will or living trust, it’s important to consult with a licensed and reputable attorney. They will work with you to help plan and draft documents, while making sure those documents adhere to both state and federal law.
Pros and Cons of Livings Trusts and Wills
Understanding the pros and cons of both wills and living trusts each could help you decide which is right for you and your family.
Effective date
A will does not go into effect until after you die. Keep in mind that if you were to become incapacitated, a will does not provide authority to manage your property.
On the other hand, a living trust becomes effective immediately. This means you can manage or distribute your assets in the present, immediately after death, or into the future.
Cost
The size and complexity of your estate will determine how much a will or living trust would cost. Typically, creating a will is a straightforward process, and can be less costly than a living trust.
Developing a living trust is usually more complex, and can be a bit more costly, since it will be actively managed once it’s created. However, each situation is unique and can affect the overall cost.
Probate
If you have a will, your estate would go through a probate court after you die. The probate court would confirm the validity of your will and name an executor of your will. That person is responsible for carrying out the terms of your will. This can be a time-consuming and costly process.
A living trust typically avoids probate. Your property would be passed immediately to the beneficiaries you name, and it’s typically a much smoother process. However, the Grantor must do a thorough job of retiling assets so that the trust is in fact the legal owner of those assets.
Privacy
Since a will must be probated, its contents would become public record. This means that anyone would be able to see the details of your will.
A living trust does not go through the probate process, which means it stays private. If you want to ensure your asset values or beneficiaries remain private, a living trust could be a better fit for you.
Guardianship of minors
A will has the ability to appoint guardianship of minor children. Remember, if you do have children under the age of 18, it’s best to ensure they have an appointed guardian. If they do not have one at the time of your death, your family will have to go through probate court, and one would be appointed.
You cannot name a guardian for a minor child in a living trust. However, a trustee has the ability to manage any assets held by the trust for a beneficiary that is a minor.
Which is best for me?
There’s no right or wrong answer. There are benefits and drawbacks to both wills and living trusts, and your own personal situation might make one better than the other. Consulting with a trusted, licensed attorney or advisor can help you make the decision that’s best for you.
Trust Point’s experts can help you establish, build and maintain a will or living trust — all while keeping your best interests in mind. We’re here to walk you through the entire process, so you can be sure you and your loved ones are cared for.
Give us a call at 800-658-9474 or fill out our online contact us form to learn more about how our team can help you reach your goals.
