Will vs. Living Trust
You work hard for your money. It’s only natural to want control over what happens to your assets after you die. Whether you are a person of modest means or you have a wealthy Estate (all the money, investments, and property owned by a person at death) make sure you choose the best option for your loved ones after you’re gone.
What is a Will?
A Will is a document signed and witnessed, to indicate how your property will be disposed at the time of your death. It is revocable and can be updated at any time during your lifetime. The Will lists how you would like your estate and affairs handled upon your death.
Probate is the process by which a Will is validated and a judge assures that the deceased person's creditors are paid, and that any remaining assets are distributed to the proper beneficiaries. Usually a person named in the Will (known as the Executor), is responsible for managing the affairs of the estate as it goes through probate court. This process usually involves the Executor having to hire an attorney and can take months to several years to complete. It is a very expensive process for the estate.
What is a Living Trust? A Living Trust is a document that outlines how you would like your estate handled if you became incapacitated or after your death. The Trustee, person or company identified to handle the affairs of the Trust is responsible for managing the estate based on the terms set. The terms usually describe how your assets will be distributed. Benefits of a Living Trust:
Privacy & Protection. Having a Living Trust protects the owners from public view and keeps the wealth private so that creditors cannot come after it.
No Probate. No legal fees or expenses associated with probate court which can become a long, emotional, and complicated court proceeding. Probate often eats up to 5-10% of your estate in some cases ALL of your estate value.
Quick Estate Settlement. The trustee/successor trustee can immediately distribute funds and manage property as indicated in the Living Trust during your lifetime and after you die.
Provisions & Flexibility. Accommodate special needs of your family. You can make provisions for minor children. You can also regulate how distributions are made and to whom.
Tax Advantages. This can vary with your specific situation but typically estates can be exempt from paying federal estate taxes.
A Living Trust is one of the simplest and most commonly used methods for passing assets to your loved ones after you’re gone and avoiding financial disaster. Ask yourself the below questions to determine if you should invest in establishing a Trust versus a Will.
Do you own property? If yes, you may want to consider a Living Trust because property will likely be subject to some form of probate.
Do you have children under 18? Who will raise your children if you and your spouse both pass away? If so, a Living Trust allows you to name a guardian for any minors and outlines provisions specifying particular life events when a child will be entitled to any assets held in the trust.
Which is best for you?
“Put Not Your Trust In Money, But Put Your Money In Trust.” – Oliver W. Holmes
This article is intended to convey general information and might not apply directly to your unique concerns. It's not legal advice.