Whether you want to go with a will or a living trust is entirely your decision. But first, understand what both of these legal documents mean for you and then make your final decision. Both living trusts and wills are good options if you are looking to plan your estate in good time. You must understand the difference between the two to make a sound decision.
What Is A Will?
The most common type of legal document that you will come across is a testamentary will which is a legally enforceable document according to which all your affairs and assets are distributed among your legal beneficiaries after you die. You can include various directives about how you want your estate to be distributed. You can also include instructions as to what is to be done at your funeral or memorial service. Experts usually suggest that you should seek legal counsel from a dependable living trust attorney in your vicinity or somebody you can trust when you are about to create a testament.
What Is A Trust?
Trust is also a legal document and it is more of a method of estate transfer as well. It is a fiduciary relationship in which you as the grantor are going to create a trust and will appoint a third party as the custodian of all your assets that are to be distributed among your beneficiaries. You can create a trust for a variety of functions and there are several types as well that you can choose from.
This is where a living trust comes into question. A living trust is a legal document that is going to place almost all of your assets into a trust while you are still alive. The assets will be owned and managed by the trust and not the grantor. You can continue to use your assets as you would in your normal life and you can also spend your money just as you want to. However, after your death, the trust will be managed by a trustee who will be chosen by you. He will also be responsible for distributing your assets among your beneficiaries at a time chosen by you.
It is entirely up to you which legal document you want to go for. You must understand the benefits and drawbacks of both these legal documents so that you can come to a more practical decision.
Benefits Of A Living Trust
A living trust is easy to understand and it helps you save a lot of money by avoiding any probate costs. A living trust does not have to go through a court procedure which means there are no costs attached to it as there are to a traditional will.
- Regardless of what terms you might have put into your living trust, they are not going to become public record.
- Your family matters are going to remain as private as you want them to be people are usually not able to contest a trust as freely as they can contest a will.
- A trust can give you more flexibility as to how you want to distribute your assets.
- You may choose to distribute your estate upon your death or at a specific date in the future.
Benefits Of A Will
Your last will or testament is a document in which you are going to express your intention of distributing assets upon your death. It has the following benefits you should be aware of.
- Distribution of property becomes very easy and everything will be done as per your wish after you have passed away.
- You can provide financial security to the members of your family who are incapable or in need of such assistance.
- A will also lets you appoint guardians for any minor members of your family.
- It makes it easy for you to keep an inventory of all your assets.
Let’s Compare The Two Legal Documents Side By Side
A will is not going to go into effect until after you have passed away. A living trust on the other hand can be created and funded while you are still alive.
Probate Proceedings And Family Privacy
Your estate is going to go through a probate process regardless of whether you have created a will or not. The probate court is going to confirm your will/last testament and allow the executor to do the needful as per the instructions given in your will.
This is not the case with a living trust because it does not go through any probate. This means that the affairs of your family are going to remain private. The entire transition of your assets from your trust to your legal heirs is going to be very smooth.
Overall Cost And Complications Of The Document
Experts are of the opinion that living trusts or any trusts for that matter can be a little more complex as compared to a traditional testament. A trust usually requires a lot of paperwork and as a result, they tend to be a little on the costlier side.
When you talk about wills and testaments, they are less complicated and refinancing any property mentioned on a will is not that difficult when you compare it with a property mentioned inside a trust.
Both your wills and living trusts are usually created under different laws. Your will falls under testamentary laws and your trust falls under the contract laws.
Contract law is regarded as a lot stricter as compared to testamentary law. This means that if you have made a living trust, it is going to supersede a will.
Living trusts become effective the moment you sign and start funding them. They can be updated over the life of the grantor. A will on the other hand is going to come into effect only after the testator has passed away.
If you have any creditors, they can claim against both your living trusts and wills. However, claiming against a living trust becomes a little more difficult as compared to claiming against a will.
If you have created an irrevocable trust, you can guard all your assets against the various claims of your creditors.
If you have created a will, anybody can challenge it in the court of law claiming that you were not of sound mind when this will was drafted. A living trust on the other hand is going to establish a separate legal entity that is not only going to bypass probate but also the various ways that anybody can contest it.
A living trust is created in the presence of an estate attorney who is going to support the validity of the trust which makes it even more difficult for anybody to contest your trust.
Whether you decide to go for a will or a living trust is entirely up to you. This was a quick comparison of both these legal documents so that you can choose the right path for your estate planning and assets distribution in the event of your passing.