Will Vs Living Trust: Which is Right for Me?

You have worked very hard throughout your life and it is only natural that you would want to leave a legacy to your loved ones. It would be wise to find a way to maintain some control over the assets. No one wants the IRS, creditors, or even a divorce to stop their loved ones from enjoying the benefits of their legacy. Even if you are a person of modest means, you have wealth. Your estate consists of all your personal and real estate assets, such as retirement accounts, a home, jewelry, rare collections, etc. There are many strategies to ensure that your property is distributed according to your wishes and in a timely manner. The most basic methods of transferring a legacy are wills and living trusts, but which is best for you?

So what is a will and how does it work?

A will is a document that orders the distribution of assets owned by an individual at the time of their death. To be effective, a will must be executed in accordance with the legal requirements of his state. In general, it must be in writing, signed by a person of sound mind and by competent witnesses. It can be revoked or amended at any time in your life, but any change to the will requires you and your witnesses to sign again. After your death, the executor you have chosen must petition the court to start probate proceedings. As part of the process, his property must be assessed for estate taxes. The probate process can take anywhere from six months for an uncontested small will and can take years if there are delays in court proceedings. As with any court proceeding, the probate becomes part of the public record and is available for anyone to see.

…And what is a living trust and how does it work?

In a living trust, the grantor transfers the assets to the trust but may retain the power to manage or revoke the trust. The trust also allows the grantor to decide who will be the successor trustee and the beneficiaries of the trust after death. If you are serving as your own trustee, the trust instrument will establish a successor in the event of your death or incapacity. Therefore, after death, the court need not intervene and probate is not required. A trust can also be beneficial if you are disabled by accident or illness; the successor trustee can manage the trust property without a lengthy court process. Because no court proceedings are required, you can avoid the expense, publicity, and inconvenience of court-supervised distribution of your estate.

A properly drafted trust:

• Avoid the legalization of your assets;
• Plan for the possibility of your own disability;
• Control what happens to your property after your death;
• Avoid letting your financial affairs become a matter of public domain.

Trusts may also include provisions for the care of family members with special needs. It may be in the best interest of beneficiaries with special needs to have limited access to their inherited property. With a standard will, your property will pass to those heirs, but a will by itself does not allow you much control over the use of the property.

A trust can also be set up in a way that minimizes estate taxes. If the value of your estate exceeds the current estate tax limit, you may want to consider setting up a trust with tax planning provisions. An attorney will be able to advise you depending on your specific situation.

So the end result is…

A will is easy to establish, requires minimal time and money, but can leave loved ones heavily burdened by court proceedings. A trust is more sophisticated than a will and allows you to accomplish much more than a will, but don’t overlook the fact that it involves more up-front effort and expense. A trust, however, allows you to establish provisions that allow you to feel at ease and know that even though you are no longer with your loved ones, they will enjoy your legacy exactly the way you want it. When choosing between a will and a trust, remember that one size does not fit all. What is right for one person may not be right for everyone. Consult your lawyer; Your estate plan should be prepared in a way that best meets the needs of you and your family.