What Is The Difference Between a Living Trust and a Last Will & Testament?

Living Trust:

Creation and Function: A Living Trust, also known as a Revocable Trust or Inter Vivos Trust, is created during your lifetime and is designed to hold and manage your assets. You transfer ownership of your assets to the trust, appoint yourself as the trustee, and specify how your assets should be managed and distributed both during your lifetime and after your passing.

Avoiding Probate:

One of the primary advantages of a Living Trust is that it allows you to avoid probate, the legal process of distributing assets upon death. Since the trust owns the assets, they pass directly to the beneficiaries named in the trust without the need for court involvement.

Privacy and Efficiency:

Living Trusts offer a higher level of privacy as they are not public records, unlike probate proceedings, which are typically public. Additionally, a Living Trust can help streamline the asset transfer process, as the successor trustee can promptly carry out your instructions without court delays.

Management during incapacity:

A Living Trust provides provisions for managing your assets and affairs if you become incapacitated. If you are unable to handle your financial matters, your chosen successor trustee can step in and manage the trust on your behalf.

Last Will & Testament:

Creation and Function: A Last Will & Testament, commonly known as a Will, is a legal document that outlines your final wishes and instructions regarding the distribution of your assets after your death. It becomes effective upon your passing, and it appoints an executor to carry out your wishes and settle your estate.

Probate Process:

A Will generally needs to go through the probate process, which involves validating the Will, identifying and distributing assets, paying debts and taxes, and resolving any disputes. The probate court oversees the process and ensures that your wishes are followed and all legal requirements are met.

Guardianship Provision:

A Will is also where you can name a guardian for any minor children you have. This ensures that the court knows your preference for who should take care of your children in the event of your death.

Limited Management during Incapacity:

Unlike a Living Trust, a Will does not provide for the management of your assets during your lifetime if you become incapacitated. In such cases, a separate legal mechanism, such as a power of attorney or healthcare directive may be necessary.

It is important to know; estate planning should be tailored to your specific needs and circumstances. Consulting with an estate planning attorney or a qualified professional can help you determine the most appropriate strategy for your situation, and ensure that your wishes are accurately documented and legally enforceable.