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A living will and a living trust are similar in name but couldn’t be more different when it comes to estate planning. If you’re building your estate plans from scratch, it’s understandable how the two could be confusing.
The truth is living trusts and living wills are two important estate planning documents that can help you minimize confusion and cost for your family members after your death or incapacitation.
On the one hand, a living will allow you to appoint someone to make medical decisions for you if you become incapacitated. And on the other, a living trust helps you manage your assets during your lifetime and protect them from the probate process after your death.
Understanding the unique functions of these documents and how they benefit your estate is essential to creating an air-tight estate plan and helping your assets avoid probate.
What is a Living Will?
A living will is a legal document that states your final wishes about medical treatment if you become incapacitated. In it, you will appoint a healthcare agent that can make decisions on your behalf when you no longer can.
Also called an advanced health care directive, a living will also allows you to state certain end-of-life decisions, like whether you want to be buried or cremated, how you feel about prolonged life support or other extreme measures, or even whether you want your organs to be donated.
Unlike a last will and testament, a living will becomes null and void after your death and has nothing to do with asset designation. This type of legal document is beneficial to your estate by helping your family avoid disputes regarding your wishes and the responsibilities of your care.
What is a Living Trust?
A living trust is a legal agreement where you, as the grantor (the creator of the trust), put specific instructions in writing to the trustee, the person who agrees to hold legal title to all of the assets in the trust. The trustee is then responsible for carrying out the instructions in the trust for the benefit of your named beneficiaries. Living trusts can help the assets in your estate avoid probate.
While you are alive and have this revocable living trust, you are all three of those roles. You are the grantor, meaning you created it. You are the trustee, meaning you are in complete control of all assets. And you are also the beneficiary since it’s all there for your benefit.
Living trusts can be changed, if you wish, at any time before your death. So you’re not losing any control when you have a revocable living trust. Trusts allow assets to bypass probate court after your death, making it easier for your beneficiaries to inherit exactly what you want them to inherit.
Living Wills Vs. Living Trusts — Which is Better?
Both a will and living trusts are essential parts of an estate plan. They are not mutually exclusive, and they are not the same thing. Deciding which will benefit your estate depends on your goals and specific needs. Working with an estate planning attorney at Hermance Law, you can build a comprehensive estate plan that meets your needs.
What Else Should My Estate Plan Include?
The most important thing to know about estate planning is that it is not just for the wealthy. It’s for everyone, regardless of age or assets.
Estate planning can be daunting, but it doesn’t have to be complicated or costly. Here’s an overview of the many estate planning options available at Hermance Law:
All of these documents have different roles in an estate plan. And by creating a comprehensive plan for your estate, you will have legal documentation of what you would want, who you want making decisions for you, where your assets go, etc.
That’s why estate planning is so important. Without these documents, these decisions are then made by the probate court. You can ensure that your final wishes are documented the way you want by contacting an estate planning attorney at Hermance Law today.
Contact Us Today
It’s important to know the difference between living wills and living trusts because they both play a role in estate planning. However, significant differences between the two documents make each one better suited for certain estate situations than others.
If you are uncertain about whether a living trust or a living will is suitable for your situation, reach out to an estate planning attorney to learn more about these legal documents and how they can help your plan. You can schedule a free estate planning consultation with one of our estate lawyers at Hermance Law today.