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Saturday, February 12, 2022

The Differences Between a Will and Living Trust

If you have dipped your toe into the estate planning world, you likely know that there are a plethora of legal tools that may be used in an estate plan despite most people only having a passing familiarity with wills. In fact, did you know that many people opt to put a living trust in place to supplant the role of a will in distributing assets of an estate? It’s true! Both wills and living trusts can be used as estate planning tools to help ensure your assets are properly protected and distributed to your heirs upon your death. So, what is the difference between a will and a living trust?

The Differences Between a Will and Living Trust

A will is a written legal document used to express the wishes of the testator, the person creating a will. A will outlines how the testator wishes for his or her affairs to be handled after dying. It can direct that certain assets be distributed to family, friends, or even charities. Each state has specified formalities that must be observed in order for a will to be legally effective upon the death of a testator. It should be noted that a will only becomes active after the testator’s death.

A trust, on the other hand, becomes active the day it is created by the grantor of the trust. It does not activate after the grantor’s passing. There are a wide variety of trust types and the type of trust utilized in an estate plan will vary depending on the goals of a person. Irrevocable trusts, for example, cannot be altered after being created, but are still created often for tax purposes. Revocable living trusts, alternately, can be altered with relative ease and are commonly created for the purpose of outlining the grantor’s wishes for how assets should be distributed upon his or her death. It is important to note, however, that assets distributed by the living trust must be properly transferred into the trust. This means that title of ownership over an asset must be transferred from the grantor to the trust so that the trust is the owner of the asset.

You may be wondering at this point why a person would establish a living trust for asset distribution upon death as opposed to only drafting a will to serve this purpose. One of the main reasons people opt for a living trust over a will to serve this purpose is because a will must go through probate whereas a living trust will circumvent the probate process. Probate is the court monitored process of verifying and distributing the estate of a deceased individual. Any asset in the deceased’s probate estate will need to go through this notoriously arduous process. Probate can be frustrating, time consuming, and costly. Furthermore, there is no privacy in probate proceedings as they are a matter of public record. With a living trust, on the other hand, the assets held in the trust will avoid probate. This means that the distributions of the assets will remain private and will avoid the time and cost associated with probate proceedings.

Estate Planning Attorney

Do you have questions about the best estate planning options for you? Do not hesitate to reach out to the team at Monk Law. Contact Monk Law today.


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