Living Trust Articles >> Will Versus a Living Trust

Will Versus a Living Trust

Simply put, the difference between a living trust and will is the trust offers you and your beneficiaries better control of your assets and allows your estate to skip probate generating a total savings of thousands. While most know the basics of a will, a living trust has much to offer anyone with assets regardless of age or marital status.

Will vs. Living Trust

In a head to head comparison of a will versus a living trust, there is no doubt that the living trust comes out the winner. A will is a formal document that outlines your wishes and plans for your estate and dependents following your death. A living trust not only does everything a will can do, but offers significant savings in the form of probate fees and possibly some estate taxes as well as giving you better control of your property both during your lifetime and after.

The Will

A will does many things upon your death. In a will you specify your preferred arrangements and distribution for your property and assets following your death. You also specify your desired custodians and financial arrangements for your dependents. A will also names an executor to your estate who will be in charge of seeing your wishes carried out and ensuring all taxes, creditor and fees are paid from the estate and all paperwork is filed.

When you die, your will must be probated to ensure that it is valid and allow the government to take an accounting of your property before dispersing it to the designated beneficiaries, including their own 2-4% in fees. The executor of the estate files all the paperwork and locates all the estate assets for appraisal. The probate process includes liquidating any necessary assets to pay taxes and fees and well as make any cash bequeaths.

The process of probating a will can take years and while the will is in probate, no bequeaths can be made and costs mount. Additionally any distributions will be made by the executor to the designated party when that individual turns 18. The probate court recognizes 18-year-olds as adults, even if you do not.

Additionally, a will is easy to contest in court as the contesting party need only prove you were not in the right mind at the time of signing. Your will can also be contested by dependents not named in the will, such as children born after the will was created.

The Living Trust

In a living trust, all property is transferred to the trust while you are still alive. This makes the trust the owner of your assets rather than you. So, when you die, there is literally nothing or close to nothing in your estate to probate. You have little or no property to your name and the trust, along with your assets, passes to your successor without any time delays on funds or disbursements.

A living trust allows you to make decisions about your money and property as well as making plans for its disbursement. There is no set age for disbursement with a living trust giving you the option of leaving money to dependents or beneficiaries in a staggered amount or when they reach a certain age you feel to be more acceptable than eighteen. In fact, a living trust also allows you to leave property to unborn beneficiaries should you choose to do so.

A living trust allows you to make arrangements for your minor dependents as well as any other preferred beneficiaries. The trust can be modified at any time to include or remove beneficiaries and new assets should be added as they are acquired to ensure all property belongs to the trust rather than yourself which would require probate.

In addition to planning for events following your death, a living trust also allows you to make provisions should you become incapacitated. The trust continues to operate without government interference under the management of a successor or co-trustee should you no longer be able to manage your own trust. The successor will continue to manage and make distributions from your trust following your death.

Finally, a living trust is almost impossible to contest. To prove a trust is invalid, a party would have to prove you were not in the right mind the day you created and set the conditions of the trust. Then, that party would have to additionally prove that you weren’t in the right mind every day you managed or were part of the trust following its inception. A trust becomes irrevocable upon your death making it impossible to change, thus effectively keeping your property under very tight control.

There are many advantages to a living trust and revocable living trusts. Read more about what these estate planning tools can offer you in the form of protection and savings or get started now by downloading the simple trust packet for your state.