A living trust is a document that can help you avoid probate, save you money, and protect the privacy of your estate. This legal document contains the details of what should happen to your assets once you pass away and is considered a vital part of estate planning.
A living trust is a legal document through which your assets are placed into a trust for your benefit and transferred to your beneficiaries at your death by a representative you have chosen known as a “successor trustee”
A Will is a legal document that contains a plan of distribution that outlines a plan for distributing your assets upon your death. You will name an Executor who will oversee the process. It is important to note that nothing in your Will takes effect until after you pass away.
Both of these documents allow you to choose a guardian for minor children in the event of your death.
A living trust offers some advantages over a Will, here are some to consider:
One of the first benefits of having a living trust is that it avoids probate. With a Will, your estate will be required to through probate, which are the court proceedings through which your assets are distributed according to your wishes by your executor.
Since a living trust does not have to go through probate, your assets will likely be able to be distributed much quicker. Additionally, if you have any debts, your successor trustee will pay those off on your behalf and distribute your assets according to your instructions.
Drafting a living trust will likely cost you a little more initially than drafting a Will since it is a more complex legal document. You’ll also be required to transfer your assets including bank accounts, stocks, and bonds to the trust since the existence of a living trust doesn’t fund the actual trust.
While a Will typically costs less to draft, a living trust may save your estate money after your death since the distribution of assets will not go through probate. Any court costs associated with probating your Will are taken from your estate. The actual cost of this will vary and will also depend on whether your Will is contested.
One of the main differences between these two legal documents is the level of privacy offered. A Will is considered public record so all transactions will b public. While a living trust, on the other hand, is not made public upon your death which means the details of the distribution of your estate will be in private.
Another benefit of a living trust is that in the event you become sick or incapacitated your trustee can oversee your finances on your behalf without needing to go to court. If you have a Will without a durable power of attorney, the court will have to approve someone to oversee your finances.
Another benefit is that since a trust is revocable should you dispute your incapacity; you can retain control yourself.
An experienced estate planning lawyer can help you decide whether a living trust or a Will is better for your circumstances.