Estate planning can be confusing. You have a multitude of options for how your assets should be handled in the event of your death. While a will is a route most people take for directing their assets after death, there are times where having a living trust is more beneficial.
What is a Will?
A will is a legal document. It contains a plan regarding the distribution of your assets should you pass away. Essentially, it allows you to have some final input into how your estate should be managed, even if you cannot make the said changes yourself.
Your will includes a designated executor. An executor is a person you select to help distribute your assets as set forth in your will. The executor has no say in regards to the management of your assets until your death. Upon your death, your estate goes through probate. During these court proceedings, your assets are distributed according to the executor’s instructions as the representative of your will.
What is a Living Trust?
A living trust is also a legal document that places all of your assets into a trust. The trust functions, with you designated as the trustee, until your death or a point where you become mentally incapacitated.
Prior to your death, you have full rights to manage the assets held in the trust as you see fit, conversely you are not the legal owner of the items. Instead, the trust is the legal owner. You simply maintain the legal right to manage the assets that the trust owns. Instead of designating an executor to manage the distribution of your assets, you select a successor trustee to assume control of the trust should you no longer be able to manage the assets.
Which is Right for You?
To help you decide which option is right for you, there are a few considerations that need to be made. According to Steve Bliss, a probate and estate planning attorney, one benefit of using a living will is it can keep everything out of Probate Court.
Ordinarily, your trustee successor is allowed to take immediate control of the trust should you become incapacitated, or if you pass away. This allows assets to be distributed more quickly, as court proceedings are not necessary. Nevertheless, a living trust can also help you maintain a level of privacy. As part of probate proceedings, your will is submitted to the court to open probate. At that point, your will becomes public record. This means that it can be read by anyone who requests it, allowing them to verify what you left and to whom you left it. Trust documents can only be viewed by beneficiaries or heirs, depending on the laws governing the process in each state. Accordingly, the only way the information becomes public record is if a lawsuit is filed regarding the document’s validity.
While a will only takes effect upon your death, a living trust can be enacted should you become incapable of managing the trust. Notwithstanding, this can include instances of mental illness, as well as medical conditions that render you unable to manage the assets, such as a prolonged coma. While the assets within the trust would not be distributed until your actual death, the successor trustee can take over the management of the assets immediately.
Does Having a Living Trust Mean You Don’t Need a Will?
Whether you would need a will and a living trust depends on a few variables. For example, if you own other assets that are not put into the trust, you may want a will to manage how those are distributed upon your death.
Additionally, many states require that issues regarding the custody of any children to be addressed in a will, and not a living trust.
How to Decide
Consequently, the best option for you may be simple or you may find it challenging. When in doubt, seek out the assistance of a legal professional who specializes in the area of estate planning and probate.
Moreover, this can allow you to ask questions regarding your specific situation and determine which path works best to meet your needs.