The pandemic has a lot of people thinking about their estate planning. One of the issues that you may consider in this planning is whether you want to create a living trust in addition to a will or instead of a will. The decision is a very personal one and will depend on your specific needs. Read on to learn what you should know about when you’re thinking about a living trust.
A will is a written document that designates how your property will be distributed when you die. It is revocable, which means it can be canceled and changed at any time while you’re alive. If you have a will, it also allows you to appoint an executor, a guardian for your minor children, designate how to pay your taxes and forgive debts.
A living trust (specifically, a revocable living trust) is a legal document that is created during an individual’s life where a named person (the trustee) is entrusted with managing the individual’s assets for the benefit of another person (the beneficiary). This serves the purpose of managing your assets (bank accounts, real estate, investments, vehicles, personal property) in a trust during your lifetime because often you’re the trustee; it is also setting up the management of your assets and estate after your death or incapacity with naming a successor trustee, who acts as your representative and transfers your assets to the beneficiary based on your wishes. The naming of a successor trustee is a key difference between a will and a living trust.
What are the Advantages of a Living Trust?
There are several advantages when deciding whether or not to you should take the time to create a living trust. Here are some of the reasons that some individuals favor them:
- Saving money on estate taxes
- Avoiding probate: This allows you to skip the court proceedings.
- Protecting your privacy: Since you’re avoiding probate, you can keep information from the public.
What are the Disadvantages of a Living Trust?
Like most things, there are some reasons why an individual might not want to get a living trust. Here are some key disadvantages to creating them:
- Limitations: No executors or guardians: A living trust doesn’t allow you to name an executor or a guardian for your children.
- More expensive: Living trusts are typically more expensive to create compared to a will.
- More complex: Instead of merely having a witness, like you have for a will, a living trust requires signing it in front of a notary.
Living Trusts and Wills
Many people form a trust in addition to having a will, rather than as an alternative. An example of the way that these two documents work together is if you get a “pour-over will.” This type of instrument states that anything that’s not already in the trust should be included at the time of death.
Get Help with Drafting Living Trusts and Wills from an Experienced Attorney
Although living trusts aren’t a must for everyone, they can certainly serve individuals well. The ideal estate plan is the one that works with your unique needs and fulfills your wishes. If you need help with drafting a living trust or a will, you should seek the services of MOWK Law Estate Planning attorneys who can help you get through the process smoothly. Contact us to get started with your specific plan.