Trusts and wills are often confused with one another or used interchangeably. However, these two forms of estate planning are actually quite different. Depending on your needs, goals, and personal situation, one of these options might work better for you than the other, so it is important to understand their differences to make the right choice.
What is a Living Trust?
Different types of trusts provide different protections. There are three types of trusts that can address a variety of issues in your estate plan:
- Irrevocable living trusts: An irrevocable living trust presents some unique tax implications that make them an attractive option for high net worth individuals. Once you move property into an irrevocable living trust, you place it under the control of your named trustee and cannot undo it. It will essentially last forever.
- Revocable living trusts: Unlike an irrevocable living trust, the grantor can change the terms of this type of trust at any given time. During your lifetime, you can also act as your own trustee. After your death, the individual you named as your trustee would take control.
- Testamentary trusts: This type of trust is not quite a “living” trust since they essentially do not exist until the death of the testator. Upon your death, the person you named as the executor of your estate would create the trust.
What is a Will?
A will is a legal document in which you can state your wishes regarding how your property and assets are to be distributed. You can express who should care for any minor children if you die before they reach the age of majority. If your wishes change at any time, you can adjust your will accordingly.
What Are the Differences?
One of the biggest differences between living trusts and wills is that a will must go through probate before property can legally transfer to a decedent’s living beneficiaries. When submitted for probate, wills also become public record, whereas the terms of a living trust can remain private.
Here are some of the other differences between wills and living trusts:
- Trusts become effective as soon as they are signed and wills go into effect upon your death
- Trusts can provide for both life and death, whereas a will cannot offer assistance in the event of your mental disability
- Wills can only govern property owned in your name at the time of your death, but a living trust can distribute or govern any property it is funded with
Contact an Experienced Estate Planning Attorney Today!
If you are unsure if you need a will or a living trust, consult with an experienced estate planning attorney to determine which option is best for you. At Drexler Law, our estate planning team can help you make the most suitable choice for your circumstances and help you create a will or living trust that clearly states your wishes.
Call our law office today at (719) 259-0050 to schedule a consultation.