If you are dealing with documents that help with the end of life, you have heard about a will and living trust. These are two of the most common items used when planning what to do with your estate after you leave the earth. However, it can be tricky to understand the differences between the two.
Keep reading to learn more about the vital difference between a will and a living trust. Both are helpful, but they serve different purposes. It is critical to understand this so you know which you would prefer to use or how you might make use of them in tandem with each other. These are very useful if you have things that you want to pass down to others.
Will Versus Living Trust
When They Go into Effect
When looking at a living trust and a will, it is critical to note when they go into effect. This item is a vital difference between the two. One goes into effect while you are still alive, while the other does not until after you have passed.
The two go into effect at different points, which many people do not know. These include:
- Immediately: The trust will go into action immediately. It can be utilized to distribute property at any point, whether during your life or after death.
- After you die: A will only goes into effect after death. Only then can property be given out, enforced by a legal representative who ensures that things go smoothly.
These times should go into your thought process when you are thinking about documents to select.
A living trust is more useful if you want to distribute property while you are still alive. However, both can be used to pass things that you own to members of your family or people that you trust. When they go into effect only matters if you have different periods for transferring your items.
What They Do
Knowing what these documents do is another difference. Knowing this will allow you a basic understanding of all that comes with these and what you can do with them. They are both beneficial in contrasting ways.
A will is:
- A legal document that can be created at any point in time
- A piece that allows you to decide who gets your property and takes care of your family
- A letter that holds your last wishes
A living trust is a little different than a will. This item is:
- A legal document that can be created at any point in time
- A piece that designates a trustee to manage the assets for a beneficiary
- An item that is intended to allow an easy transfer of items after death
As you can see, both of these documents serve differing purposes.
Take on either of these while you are living. Without a will or trust, your family will go through stress and work to figure out what to do with your stuff. Examine your options and look to an expert for additional help if necessary.
Beneficiaries Attached to the Document
When you create a legal will, whoever is attached to the document gets the items you want them to have from your estate. These people might include family members or close friends. A will gives power to an individual, usually called an estate Executor when named in the will, to ensure that everything is distributed properly and that the process goes smoothly.
A trust is a little more complicated. The beneficiary named in the trust will receive property you want them to receive upon your death. Unless you wish to make a transfer of trust property to the beneficiary earlier while you are alive. The trust creates this flexibility in decision making that the will document does not.
Properties Covered Inside
Both of these documents permit you to discuss what you would like done with specific real properties (real estate) at the end of your life. There is a difference in what is covered within a living trust and a will. If you are someone that has multiple properties, you should consider this as you are planning for the end of your life.
In terms of property, a will allows for a property that is in your name. This statement does not include items that you share with other people, like joint tenancies. A living trust will only allow for a property that has been legally transferred to the document. This space can be anything, but you must ensure it has been attached to the trust before something happens to you.
What They Allow Planning For
Some things set them apart in terms of planning. A will permits you to plan for certain things that a trust will not. It also works the other way around. We’ll go over each of these to better your understanding of the documents.
A will allows you to plan for:
- A guardian for any of your children
- Arrangements that you would prefer for your funeral
A trust does not allow for these things, but it does permit entirely different ones. This document allows you to:
- Plan for any disabilities
- Give savings on taxes
These are not allowed with a will.
Both of these allow planning for different items. You should figure out what matters to you most when selecting a document that prepares all you own. With each item, you are going to get different benefits
Conclusion
A will and a living trust are different items. Though they seem very similar, many vital differences can have varying impacts on the entirety of your estate. In some instances, it may not make much of a difference whether you use a will alone or add a trust document as well. But there are certainly situations complex enough in which a trust allows for much more efficient and beneficial estate planning. By understanding these, you can figure out the actions that you need to take for the end of your life.
You can pick a living trust or a will, or you can use them in tandem to cover as much of your estate as possible. It can be tricky setting these up, but with a little bit of help, you will be able to get everything settled and prepared long before you are going to need them.
Contact The Elmer Law Firm for assistance in managing your will or living trust. We provide estate planning services in Tuscaloosa and Jasper, Alabama.
