Estate planning can be uncomfortable—confronting your mortality is
never easy. Understanding different kinds of estate planning documents
can also be confusing, unnecessarily prolonging the estate planning process.
Today, we're here to tackle one of the most common estate planning
questions, namely, "what's the difference between a living trust
and a will?" We'll also help you understand why having both a
trust and a will can help you preserve your legacy.
How Is a Living Trust Different From a Will?
To keep it short and sweet, a will goes into effect after you die. A trust,
on the other hand, goes into effect when you create it.
However, that's oversimplifying things a little.
Let's start with living trusts. When you create a trust, you appoint
one person or entity (it could be you, a bank, an attorney, etc.) as a
"trustee." Whoever receives the benefits of the trust is named
a "beneficiary." The trustee is responsible for ensuring the
beneficiary receives the assets located in the trust.
You can modify trustees and have the trust go into effect after you die.
For example, let's say that you make a trust when you're 70. You
give your three-year-old grandson a piece of property and specify that
they'll gain access to it when they're 25. If you don't think
you'll live 22 more years, you can appoint your attorney as the trustee
and preserve the trust until the beneficiary (your grandson) receive the
benefits (the property).
There are two types of living trusts: revocable and irrevocable. When you
create an irrevocable trust, you can't change it after it goes into
effect. In contrast, you can change a revocable trust at any point in time.
Generally, a revocable trust is preferable to an irrevocable trust, since
it's more flexible. However, irrevocable trusts also have their benefits—for
example, they can preserve assets for a beneficiary even if the trustee
Now, onto wills.
A will allows you to make certain provisions that aren't available
for trusts, such as establishing a guardian for any children you might
leave behind. Wills also allow you to itemize smaller assets, such as
keepsakes you want to pass down, more easily than a trust.
You can also use a will to establish Power of Attorney. Power of Attorney
allows you to dictate who makes sure your will gets carried out. Typically,
it's wise to give Power of Attorney to a neutral third party, like
a lawyer, who won't gain anything from interfering with your will
and can act as an arbiter for any disputes that occur among beneficiaries.
You can also use Power of Attorney to set up a medical plan for yourself
if you become physically or mentally incapacitated.
Should I Get a Trust or a Will?
Putting large assets into a trust, like your estate, enables beneficiaries
to avoid the probate process. Since probate often takes a considerable
amount of time any money, having assets in a trust can make life easier
for your beneficiaries down the road.
However, a will has capabilities a trust simply doesn't possess.
To preserve your legacy for future generations and ensure your beneficiaries
are taken care of, establishing both a living trust and a will is vital.
At the Law Office of Kathryn Marteeny, we'll work with you to draft
a comprehensive will and trust covering all of your estate planning needs.
To arrange a consultation with one of our attorneys or learn more about
contact us online.