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Living Trusts vs Wills: Know the Difference

Living Trusts vs Wills: Know the Difference

On the surface, it might seem like living trusts and wills are quite similar.. Both documents ensure that your loved ones are taken care of after you die and determine how your assets will be distributed.

However, there are some big differences when it comes to these legal documents and how they operate. You should consider the benefits of both before deciding which one is right for you and your family.

First we will define precisely what a living trust and will are, how they work and the key benefits associated with each. Then we will explain why having a reliable will and trust attorney in Orange County is so essential to your estate planning.

The Living Trust: Definition and Types

A living trust places all of your assets into a trust for your specified beneficiaries. However, unlike other trusts, a living trust only comes into effect after you die. Usually, a living trust is accompanied by a will. Having either or both in place before the time of death prevents the long, confusing and costly probate process.

A trust attorney will help you organize your assets into trust accounts in a discreet and legally-binding fashion.

There are two most common types of living trusts to choose from: revocable and irrevocable:

  • Revocable Living Trust - Even though you transfer your assets into a trust, you still maintain control over all of these assets. This means that during your lifetime, you have the power to change or revoke the trust and its terms. The assets are under your control until the time of your death.
  • Irrevocable Living Trust - As the title suggests, this type of trust cannot be revoked, meaning that once the assets have been transferred to your trust, you no longer have control over them. Irrevocable trusts are less common, but depending on your individual circumstances, may be the option right for you.

Why Choose a Living Trust?

Most of us are more familiar with wills and assume this is the only option. However, a living trust comes with a variety of features that can bring tremendous benefit and protections to your family after your death.

One of the main benefits of a living trust is that there are less posthumous expenses than a will. This is because a trust does not have to go through probate.

Instead, the living trust is handled by the successor’s trustee, who takes over control of the trust upon your death. The trustee, like an executor, ensures that your intentions are followed and that the beneficiaries enjoy the assets left to them as you intended.

Skipping probate means that money and time will be saved, which can make a big difference for your family after you die.

Another advantage is that trusts are private. Having a will alone can lead to the probate process if you owned real estate. The same can also be true if you don’t own real estate, but do have other assets valued at more than $166,250. A trust, on the other hand, avoids probate and is a private legal document that will be discreetly drafted and organized with the help of an Orange County estate planning attorney

The living trust can then be distributed to the appropriate parties following your death. Your information and assets will remain firmly out of reach of any estranged relatives and in some cases, creditors.

The Will: Definition and Types

A will is a legal document that instructs where you want your assets and belongings to go after you die. It may also include clauses on the care you want for any minor children. Dying without a will can result in legal hurdles for your family as well as potential arguments and disagreements about the distribution of your assets.

This stress and financial strain can be avoided by preparing a will now, even if you are young and in good health. Keep in mind that throughout your life, you are free to amend your will as you see fit.

The most common decision is to have both a will and a living trust with instructions for distribution for all of your assets.

There are many types of trusts, but not all of them are always recognized by courts, which makes it necessary to research trusts before you select the one that is right for your situation.

Some of the most common types of will you may come across are:

  • Last Will - This is the most common option for a will, which is completely typed and the testator’s signature is witnessed by two people who do not stand to inherit under the estate
  • Living Will - A living will gives your instructions for your end of life medical care but does not transfer the assets in your estate.  A living will is similar to a health care directive but does not name any particular person to make your medical decisions for you.
  • Oral Will - An oral will is rarely recognized by a court because there is no evidence of its existence except by at least one witness. It is not suggested that you rely on telling people where you want your property to go after you die.
  • Holographic Will - A holographic will is handwritten and signed by you, the testator. While these are valid, not every state will recognize it.  Additionally, there are very special requirements that must be followed. That is another example as to why we recommend you seek the assistance of an estate planning lawyer instead of selecting this option.

Why Choose a Will?

Everyone should make a will once they reach the age of 18. A will helps your family and loved ones know what to do with your assets and belongings, providing much-needed certainty during a very difficult time.

A will can also include provisions for funeral costs, taxes, and other unexpected costs that your family may run into after your death. This will alleviate financial stress and worry.

If you have minor children, a Guardianship provision in your will is an essential part of ensuring that they are raised and cared for in the manner you desire. Without a will, you risk the court system deciding who cares for your children.

By avoiding disputes, providing financial security for your family, and appointing the executor, you will be ensuring that your desires are followed closely.

Choose a Reliable Estate Planning Attorney

Our estate planning and trust attorneys have years of experience in this field helping people just like you plan for the future ahead. We work with you and simplify the estate planning process so that your will or trust is set out in accordance with your precise intentions.

Contact us today to find out how we can help you with your individual estate plan and preparing your will and trust.

Maria Parker assists her clients plan for their end of life health care wishes and the ultimate distribution of their wealth after death. She personally experienced the importance of planning at the time her father passed away.

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