What is the Difference Between a Will and Living Trust?
A will and a living trust fall under the same umbrella. Both are often used in estate planning and involve the transfer and protection of assets. But they perform different objectives. If you have questions about estate planning, Brady McFarland & Lloyd has estate planning attorneys who are experts in the field and can apply their expertise to guide you.
What is the Purpose of a Will?
A will serves four purposes. These objectives are:
- Directives on the distribution of property after one’s death
- The naming of heirs
- Appointment of an executor to oversee asset distribution
- Designation of guardianship of minor children
Immediately after death, the will goes into effect. Any property solely in the decedent’s name goes into the estate. Wills must go through probate. The probate process ensures the will’s validity, examines outstanding debts, taxes, and legal fees, and ensures they are all paid and that the assets are appraised and distributed in accordance with the instructions left in the will.
What is the Purpose of a Trust?
Probate can be a complicated and expensive process. To avoid probate, estate planners often employ the trust as a tool to protect the grantor’s assets throughout their life and beyond. The ability to manage their assets while they are alive and ensure that they are distributed properly is the advantage provided by a trust.
A living trust is a legally binding document that provides instructions to the individual or the entity appointed by the grantor as to how and when their assets will be distributed to the heirs listed. The trust holds the property until its distribution.
Some assets that are put into trusts are as follows:
- Real estate
- Bank accounts
- Personal property
- Boats, motorcycles, campers
The appointed trustee may name someone else as a successor if they are unable to perform their duties. The trustee controls the assets and can shift them in and out as they see fit.
Differences Between a Will and a Living Trust
There are a few differences between a will and a living trust. Your estate planning attorney can help you to understand which will work best in your case. Here are some of the primary distinctions:
- A will goes into effect upon death.
- A living trust is effective as soon as it is created.
- A will must go through probate. It can be a lengthy process and takes a year or more to sort out. It can be costly when the state’s probate fees are between 5-10% of the value of the assets.
- A living trust avoids probate and the fees that accompany it.
- Wills are public documents. Anyone can examine them and even contest them.
- Living trusts are private. Avoiding probate means avoiding public scrutiny if that is important to you.
- Living trusts require active management and are sometimes costly to put together. This means that they may be the more expensive option.
Your estate planning attorney can help direct you to the option that will preserve more of your estate for your loved ones. Protecting the things that matter to you for the people who matter to you is their specialty.
Contact Us for Your Estate Planning Needs
Brady McFarland & Lord, LLC is ready to guide you through the estate planning process. We understand the hard work and the care your valuables require and that you want to ensure the people you love can keep as much of them as possible. Our estate experience can help you avoid costly mistakes while providing advice that will preserve your wealth and serve you and your beneficiaries well.