Living Trust vs. Will
Living TrustA living trust can provide a vehicle through which you can ensure property and assets you hold are managed how you intend, and also avoid some of the hassles that tie up the distribution of assets after death.
- Probate: Assets in a living will do not go through the probate process, which can save a great deal of time and money during the estate distribution process.
- Incapacitation: A living trust also provides capacity for the management of assets to pass on to another individual (a trustee) before death actually occurs. For some medical ailments it is known that a period of incapacitation may exist (or sometimes this occurs randomly) and planning for this can be useful. A living will can ensure that the management of assets does not go into conservatorship.
- Legal Challenge: Legal challenges to living trusts are rare and far less likely to succeed than challenges to wills. There are many legal mechanisms whereby wills can be successfully challenged and result in the intentions of the writer not being met so this can be an important consideration.
- Funding: A living trust must be funded and have assets transferred to it before death or incapacitation occurs in order to do as you intend with those assets. If you set up a trust but don't actually do this then the living trust is of no value.
- Successor Trustee: When initially setting up a trust you will likely be the trust manager and upon your death or incapacitation you need to ensure you have named a successor trustee to manage the trust in accordance with your wishes.
WillA will is also very important and some aspects of after death planning need to be addressed in a will, not a living trust.
- Guardianship: For minor children guardianship will need to be addressed in a will, not a living trust. Establishing who will care for your children is an important consideration to address before the time comes.
- Additional Property: Upon death there are almost always assets and considerations that will not have been included in a living trust. Specifying the treatment of all remaining assets and other items is important to address in a will.
- Executor: For anything not managed through a living trust you need to ensure an executor is named to deal with all the remaining assets and administrative requirements. This can be the same as your successor Trustee.
Living Trust vs. WillFor estate planning a living trust may or may not be necessary, whereas a will is almost always necessary. When determining whether to set up a living trust as well you want to consider your specific circumstances and what you intend to be done with your assets. In addition to this you need to consider the cost related to setting up a living trust as for small estates the extra admin and legal costs may not be worth it.
By Jeffrey Glen