Did you know that each day 8.78 of 1000 people die each day? Are you considering having a living trust or will but aren’t sure which is right for you?
In this article, explore a comparison between a living trust vs will. Read on to explore the difference between the two and decide which is the better option for you.
What Is a Will?
The difference between a will and a living trust is that a will is a written document. It states how the property will be given out when you die.
It’s subject to amendments and revocable during your life. You can choose a guardian for any minor children. Whether you’re looking to do a trust or will, you’ll want to reach out to a law firm with experience such as Citadel Law Firm PLLC.
What Is a Living Trust?
A living trust looks to property management for your life and after death. If you’re your own trustee, a trust instrument will choose the successor when you’re incapable or dead. It doesn’t require court intervention.
It’s a way to:
- Plan for incapacity
- Use it for different estate sizes
- Stop financial affairs from going into a public record
- Decide what happens to your property after death
Will a Trust Keep Me Out of Probate Court?
You’ll want to avoid probate court during a trust. Probate court is when your heirs can spend months determining your estate’s plans if they’re not set out. This can cause 2-4% of your estate to be lost due to court costs and fees.
The probate court is in charge of trusts, conservatorship, guardianships, and wills. After your death, a probate court might take a look at your testamentary will. This is a legal document that transfers your estate, select will executors, appoints guardians for minor children, and sets up trusts for your survivors.
The executor determines the estate which can take from 6 to 18 months. To avoid your executor having to go from court hearing after court hearing, it’s a good idea to have well-drawn out documents of your trust.
Funding Your Trusts
You’ll also want to make sure that your trusts are properly funded. Ensure that you update your beneficiary designations. If you don’t, then your trust might not be worth as much as you’ve spent on it.
Private Estate Plan
When you create a last will and testament, it’s filed with the probate court and becomes a public record. That means anyone can see it. A Revocable Living Trust is a private contract that’s between you and the Trustmaker.
The document can remain private as long as your beneficiaries don’t need to go to court. Only the beneficiaries will have access to it after you’re incapable or die.
Cost of Living Trust vs Will
You need your trust to be managed for them to stay valid. Trusts cost more than wills due to this. The plus is avoiding the cost of probate court.
While wills are inexpensive to set up, the probate process can add up fast. Probate lawyers can charge by the hour, and it can be a long process.
Creditors?
There’s no cut-off date for creditors to have claims against your estate. Trustors who owe money to creditors can have the creditor come to collect payment after your death. Wills have a cut-off date for creditors.
Mental Disability Claims
A trust will allow the individual to choose who should manage the property if you become mentally incapable. A will can only be used after your death so doesn’t have these provisions.
Revising the Document
Wills and living trusts both let you make changes to your document when your wishes or circumstances change. Any decisions you make aren’t set in stone until your death.
If you choose an irrevocable living trust, they can’t be changed after they’re finalized. This is normally for the wealthy to keep money from taxes and are more complicated than the standard revocable procedure. Whether you’re going with a revocable or irrevocable living trust, it’s a good idea to speak with a lawyer who specializes in these.
Transfer Property
In order to leave property through a living trust, you’ll need to transfer it into the trust. You can make a list of the property and attach it to the trust document. If you have title documents such as real estate, you have to have them retitled so the owner of the property is the trust.
While it’s not difficult to do, it’s an extra step necessary. If you use a will, you’re not required to transfer property.
Naming Executors
Wills allow you to choose an executor who will take care of the estate after you die. They’ll communicate with the court, distribute any property that goes through probate, and pay any bills leftover.
As far as living trusts, you can’t choose an executor. You can name a successor trustee who can manage the property that’s through the trust. You can choose the same person for the successor trustee and executor to make it less complicated.
Creating Documents
Living trusts aren’t complicated paperwork. They can be more complicated than wills since you’ll need to cover the trustee’s duties. You’ll need to have a notary public sign the document as well.
Wills don’t require special language. There must be 2 people present, and it must be signed by the will-maker. If it’s created by an attorney it can be complex, but it’s not necessary for them to be.
Comparing a Living Trust vs Will
Now that you’ve explored a comparison between a living trust vs will, you should have a better idea of what will work for you and your family. Would you like to read more business content? For everything from employment to starting a business, check out our other articles today.
