Many of our clients misunderstand the difference between a living will vs. living trust. While most people have heard of both terms, most do not understand what they do and what the difference of each is.
First, both living wills and living trusts are estate planning forms. In other words, a person uses them to document their decisions about end-of-life matters in advance of their death. However, these forms have different purposes. For example, a living trust deals mostly with financial matters. On the other hand, a living will relate primarily to decisions about your medical care.
Regardless of which documents you choose, remember that every person should have the most basic estate-planning document – a last will and testament. Without proper paperwork, the government will decide who receives your money and property upon your death. They may even determine other important matters like who cares for your children! Therefore, it is important to have a basic understanding of which estate planning forms are right for you.
Living wills and other advance directives are written, legal instructions regarding your preferences for medical care if you are unable to make decisions for yourself. Advance directives guide choices for doctors and caregivers if you are terminally ill, seriously injured, in a coma, in the late stages of dementia or near the end of life.
Advance directives are not just for older adults. Unexpected end-of-life situations can happen at any age, so it is important for all adults to prepare these documents in advance.
By planning ahead, you can get the medical care you want, avoid unnecessary suffering and relieve caregivers of decision-making burdens during moments of crisis or grief. You also help reduce confusion or disagreement about the choices you would want people to make on your behalf.
A living trust is a legal document created by you (the grantor) during your lifetime. Just like a will, a living trust spells out exactly what your desires are with regard to your assets, your dependents, and your heirs. It is designed to allow for the easy transfer of the trust creator or settlor’s assets while bypassing the often complex and expensive legal process of probate. Living trust agreements designate a trustee who holds legal possession of assets and property that flow into the trust.
Under the terms of the living trust, you are the grantor of the trust, and the person you designate to distribute the trust’s assets after your death is known as the successor trustee.
Choosing between a living trust or a last will and testament depends on your personal needs and your goals with your estate planning. However, it is important to take into consideration that there are some things that a trust can do but a will cannot.
Here are some benefits of creating a living trust over a will:
You ultimately determine whether you need extra protection for your assets. Living trusts provide extra security for assets like real estate, bank accounts and mutual funds. For this reason, it is best for you to determine whether or not your assets would benefit from such a fund.
Furthermore, it can be a safety net in situations of illness and incapacitation. If you are not able to manage your trust’s money, your trustee will be able to oversee it in your absence. This will prevent the courts from hiring someone to manage your estate. It also allow you to leave your assets to your children if you so desire.
A trust can address many issues, depending on the trust language. Below are things you can do with a living trust.
A last will is a crucial estate planning document for just about anyone. Even if your will simply instructs the executor to adhere to the terms of your living trust, it is helpful to create. If you don’t have a will in place, your beneficiaries could wind up having to deal with a longer, more complicated probate process. This will not only delay the distribution of your assets but will make it more difficult for your heirs to get closure following your passing.
Can I make my own living trust? Before hiring an estate planning lawyer, some look at the cheap “do-it-yourself” approach. Generic prepackaged trusts and sample estate plans are available on the Internet. These assembly-line-type trusts are peddled to a mass audience. Most clients are not trained in estate planning. They do not realize that any number of scenarios can arise which if not addressed in the trust, could result in legal warfare. It can also involve a probate court after the person’s death.
How much does it cost to set up? The cost of hiring an estate planning attorney can vary from one law firm to another. Factors in the cost include the estate’s size and whether the trust is for a married couple or a single person. Attorney fees range from $900 to $1,500 and can go higher for wealthy estates.
What is the purpose of a living trust? A revocable living trust has many goals. It is designed to avoid probate. It protects your beneficiary’s inheritance.
Which is better, a will or a living trust? A will suffers from many limitations. In California, a will cannot pass title to real property without that will be probated. A revocable living trust is the superior means for passing on your wealth. It avoids the costs and delays of probate.
Choosing between a living will vs. living trust may be easier once you know how they work and what they are meant to do for you. And you may decide that including both in your estate plan makes sense. At the same time, do not forget about other estate planning tools you may need, such as a will or life insurance policy.
The dynamic Temecula estate lawyers at Iron Clad Living Trust can help insulate your loved ones from a messy and time-consuming probate process. It allows those you leave behind the ability to tend to the affairs of your estate without the unwanted involvement of the probate courts and expensive probate lawyers. A living trust is customized to each unique family and individual and can protect your assets, your estate, and your loved ones. Call us today at (951) 587-3737.
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