Did you know a lot of Americans don’t have a will? If you want to learn about the difference between a living trust vs will, we can help.
In this guide, we’ll answer your question, “What is the difference between a will and a living trust?”
Want to learn more? Keep reading.
Defining a Will and a Trust
Wills and trusts will overlap. Yet, there are differences between the two of them. Both dictate who will end up receiving your assets.
Both have their disadvantages and advantages. The will and trust will communicate these things differently.
One main difference is when and how they take effect. A trust’s effective as soon as you sign and fund it. Wills won’t go into effect until after you pass.
A will is a document that will allow you to name a guardian or guardian for your pets or kids. You will also say where your assets will go and explain your final arrangements.
The simplicity of a will does have some drawbacks. Wills provide limited control over the distribution of assets. Wills have to go through a probate process after you pass.
Trusts tend to be more complicated, but there are some benefits. With trusts, you’ll have more control over how and when your assets will get distributed.
Trusts come in different types and forms. Once you create a trust, you will need to fund it by transferring the assets to it.
Trusts are more complex to set up, but trusts have a significant benefit over a will. Trusts get used to avoiding or minimizing probate, which is a plus.
Which One Is Better?
When discussing trusts versus wills, think about the different and specific benefits. It isn’t accurate to assume one is better compared to the other.
Assess your goals, needs, and the situation at the beginning of the process. You can find a solution that will protect your family.
Can You Choose Both Options?
You can choose to have a living trust and a will.
Trusts give you management and distribution of your assets during and after you pass. Name guardians for your kids and appoint an executor for your estate. You can also outline your final wishes in a will.
You could choose to have a living trust and the last will. Yet, this isn’t recommended. The assets included in your last will need to go through a thorough probate process.
A last will also tend to be a public document. The assets in a trust get protected from the probate court.
The pour-over will is a kind of will created to work with a trust.
With a pour-over will, anything someone owns outside their trust will get paid to your trust when you die. Pour over wills will work as a backup plan to ensure your assets go under your trust.
A living will is different from a pour-over will and a last will. A living will is a set of documents outlining an individual’s medical decisions.
There will be a HIPAA Authorization Form. You’ll also outline the medical power of attorney and advanced health care directive.
What About Probate and Wills?
You might take the time to create a will. This doesn’t mean you can avoid your estate going to probate.
Probate is the process that your estate will undergo after you pass. If you don’t complete a comprehensive estate plan, it will go to probate.
It’s a court-supervised proceeding. Depending on how comprehensive your estate plan is, it could take a lot of time.
There are ways you can eliminate probate or simplify the process. Create a trust as part of your planning.
Things you put inside the trust will avoid probate. Having a trust will also help keep the distribution of assets private.
What Happens After You Pass?
Your testament and last will go into effect after you pass. Someone will need to notify the court to begin the process of probate.
If you become incapacitated and can’t make decisions for yourself, you’ll have no plan as directed by your will. A will is useless while you’re alive. A choice alone isn’t an effective end-of-life planning tool.
Enjoy Some Flexibility
If you end up creating a revocable trust, you can change the terms of your trust agreement at any point. You’ll execute an amendment to the document.
If you want flexibility as life changes, choose this option. You might become involved in a charity you believe in and want to help. Later, you might have a new grandchild that you’d like written into the trust.
Add them as future beneficiaries into your trust. A revocable trust lets you change your estate plans as you need.
When you create a trust, set up your plan to care for your loved ones. This will protect those you love if you can’t help them or aren’t around any longer.
Make sure you spend the time preparing these documents. You don’t want to leave your family in a financial mess. Seek a professional at smartestateplans.com.
Now You Know What Is the Difference Between a Will and a Living Trust
We hope this guide on estates and wills was helpful. Since you know the answer to, “What is the difference between a will and a living trust?” decide your plan. Will you get a living trust and a will?
Are you in need of more financial advice? Stick around and browse our different financial and legal sections today.