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Do you need a will or a living trust? What's the difference, anyway?
Chances are you have some assets, whether they be big ones like houses in your name, or small ones like that $20 bill in your wallet. Either way, most of us would like to have control over our belongings and the ultimate say in who gets them (and perhaps even how they're used) once we're gone.
Living trusts and wills are two very common documents that people will choose to draft when it comes to estate planning. Here's a general overview of how they're different:
As you probably know, a will is a document that describes one's preference about how one's estate should be distributed upon death.
So what's a living trust? For starters, a trust in general is a fiduciary relationship in which one person (the grantor or trustor) entrusts his assets with another person (the grantee or trustee). The trustee (who can be the same person as the grantor) then has the responsibility of transferring title of the assets to the trust's beneficiaries.
A living trust is simply a way to transfer assets to the trust during the trust creator's lifetime.
One huge difference between a living trust and a will is that a will must go through probate, while a living trust doesn't. Probate is the process that transfers property upon a person's death. Typically, it requires a court to get involved and to hear arguments from those who may contest the will. With a living trust, however, this often stressful process is avoided, because assets are technically transferred to the trust before the grantor's death.
Which Should You Pick?
When deciding whether to draft a will or a living trust, one factor to consider is whether you want your assets to be doled out after you die or during your lifetime. Wills only apply upon one's death, whereas living trusts only apply during one's lifetime.
Not everyone needs a living trust, but they can be useful for those with minor children who want their kids to receive certain assets upon reaching adulthood. Also, they are a good way to organize your assets if you have a particularly large, complicated estate.
Some people choose to have both a will and a living trust; others opt for one or the other. If you are without either, then courts will generally turn to your state's intestacy law by default, which may not necessarily pan out the way you hoped it would.
Need More Help?
Because each person's estate planning needs are different, it's wise to consult an experienced estate planning attorney near you to discuss your unique situation.
Another option is to take advantage of a prepaid legal plan like those offered by LegalStreet, which include an attorney-drafted will with annual updates. LegalStreet plans start at less than $13 a month, and also give you on-call access to local attorneys who can answer questions about a variety of legal issues.
Disclosure: LegalStreet and FindLaw.com are owned by the same company.