Preparing an estate plan ensures that your assets will go to those you want to receive them after your death. There are two types of documents that are essential to estate plans you can create that will complete this task; a living trust and a will. While serving the same main purpose of naming beneficiaries of your estate, there are differences between the two. The following explanations should help you decide which one is right for you.

Revocable Living Trust

There are two types of living trusts; revocable and irrevocable. The main difference between a revocable living trust and an irrevocable living trust is that the former gives you the ability to revise the document while the latter can’t be changed once it’s finalized. If you decide to prepare a living trust, you’ll most likely be preparing a revocable living trust.

The point of a revocable living trust is to describe your property and specify who gets what. An advantage of a living trust over a will is that a trust won’t go through the probate process. This is a major positive for many as it means that the estate can be distributed to the beneficiaries after the death of the grantor without any fees, interference, or guidance from the courts.

Another reason why many people will choose a living trust over a will is privacy. While a will is a public document, a living trust can keep your affairs private. This is a major plus for those that don’t want others to potentially see what assets they hold.

The biggest difference between a living trust and a will is the property that’s going to be left in the trust must be left to the trust. While a will simply states who will receive certain assets of the estate, the property left in a living trust must be transferred to the trust. For many items this is a relatively routine process that simply consists of creating a list of property and attaching it to the trust document. But other items that contain title documents, like real estate, must be retitled so that the trust is the owner.

Living trusts tend to be much more complicated than wills due to the fact that they must cover the trustee’s duties. Additionally, it must be signed by a notary public and is typically more involved as it requires the property be transferred to the trust as opposed to just being named. However, the creator of the trust can name anyone they choose to have authority over the trust property should they become incapacitated or otherwise unable to manage the trust.

Will

A will is a much more simplified document which simply describes the property being left and lists who gets the items. However, a negative of a will is that it has the potential to go through the probate process which is designed to finalize a person’s affairs after their debts and can be quite costly to those receiving the property.

Unlike a living trust, a will has the potential to name the guardians of children after the parents’ death. Additionally, as children under the age of 18 are not allowed to legally own property, it can name the person who will manage the property until the specified time of which the children will gain ownership of the property.

Within a will, you have the ability to leave instructions of exactly how you want your debts and taxes to be paid. For example, if you have a debt that you want paid specifically by your savings account, that can be specified in your will. And while a living trust must be signed by a notary public, a will simply needs to be signed by two witnesses that are not receiving any property from the will.

Commonalities

While there are several differences between a living trust and a will, in the end they are created to serve the same purpose. Therefore, there are several aspects of the documents that are identical.

Under law, children under the age of 18 are not legally allowed to own property. In both of these documents, a person must be specified who will manage that property until the child reaches the age specified in the document.

Assuming you’re preparing a revocable living trust rather than an irrevocable living trust, which you most likely are, both of the documents are amendable until death. This means that you can make any changes you deem necessary based on events changing. It’s highly recommended that you revisit your document after every major life change to ensure the document remains as wanted.

While the names and descriptions are slightly different, both documents list a person that will manage your estate after your passing. In a will, this person is called an executor and is in charge of the estate after the death. They are responsible for communicating with the court, paying any bills, and distributing any property that might go through probate. A living trust has a successor trustee that will manage the property.

An important part of preparing you estate plan for your death is creating a living trust or a will. This will ensure that your estate is handled just as you wish following your death. If you are looking to develop either of these documents, come to France Law Firm and allow our professionals to guide you.