Estate planning can be very complicated and daunting for those who do not understand the differences between the two most commonly used legal instruments: a living trust and a will. The idea behind a living trust or a will is to help manage the dispersion of your property after your death. Many people are familiar with these terms, but not what they imply or how similar or different they are from each other.
What is the purpose of the last will and testament?
By preparing a will, you can indicate which specific assets will be bequeathed to specific beneficiaries. It can be configured with the distribution as you wish. For example, you can leave your home vehicle and your motor vehicle to one person while your antique books go to someone else and your money to a third party. An executor you designate will oversee the delivery of your assets according to your will. The document can also be used to create your selection for guardianship of minor children.
What is the purpose of a living trust?
A will is only used once you have passed away. A Living Trust is created and enforced during your lifetime. It is revocable, which means that you can change it as you please. You can transfer all or part of your assets and transfer the balance of it to your death by creating a will. The Living Trust is used to control your property while you are alive and after your death. It creates the way your investments and the income they generate are supported and distributed after your death. If you become unfit or bedridden, the trust can still be controlled by a successor you have named.
What are the major differences between the will and the will and the Living Trust?
With a will, the document becomes public after your death. He is subject to an inheritance court and allows the court to deal with any dispute over the beneficiaries or the arguments raised by the creditors. All assets owned in another state are subject to probate proceedings in that state. For the will to be properly executed, you will also need to put in place a power of attorney or a conservation warrant to preserve the properties.
Living trusts remain unobtrusive after your death and none of the documents are declassified. They are also immune to probation and thus avoid associated costs. Investments in other states are also exempt from probate, provided they fall under the trust. Living trusts do not provide guidance to the courts to automatically resolve disputes between beneficiaries or creditors.
Another important distinction between wills and wills and living trusts is your ability as a transferor to manage the trust for as long as you can or want it. A living trust allows you to name a successor for a period such that you are not able or willing to supervise trust.
One of the main factors in determining which legal instrument to use is expenditure. Building a will is normally less than creating a living trust. Each provides information on equivalent tax-saving provisions. The big difference comes into play is in the probate fees. Probate fees with a will can be plentiful. Since the Living Trust is not subject to probate, there is no registration fee. This includes assets held in other states. Although the initial establishment of the Living Trust is more expensive, it reduces the costs associated with the assets invested in the trust.
To choose which of these 2 legal instruments is best for you, the best is to talk to a lawyer. However, it is clear that if both instruments give you the means to manage your assets immediately after your death, the Living Trust provides much greater benefits. It can be developed and used during your lifetime. This gives you a lot more control over the administration of your assets and allows you to identify a successor to the trust after you leave. It allows your assets and beneficiaries to avoid lawsuits, as well as the costs associated with them and their content continue to be confidential.