Only 42% of Americans have a will or living trust.
While most Americans over seventy-two years old have thought about the need, those in younger generations are not thinking that far ahead. Around 53% of those ages 52 to 71 have a will and the majority of Gen X’ers and Millenials don’t have one.
While no one likes to think about the future, it can make life much easier for your loved ones if you’re prepared for the inevitable. It will lower their stress levels and help provide for them as you wish.
Yet what about the last will vs. living trust? Is there a difference, and how can you choose the one that’s right for you?
Let’s take a look.
What Is a Last Will?
A will’s main function is to state how you would like to pass along your assets to future generations. It also appoints guardianship of any minor children you may have.
A Judge or Register in Probate will preside over your estate transfer. The will provides direction as to how your beneficiaries will get allotted your assets. You can address what you would like to leave your beneficiaries and how you want them to divide it.
A will can also allow you to disinherit a spouse or child. Anything left in a will must go through a probate court and become part of the public record.
What is a Living Trust?
Like a will, a living trust will transfer your property to your loved ones after your death. It’s created while the property owner, or settlor, is still alive. It can also be changed throughout the life of the settlor.
A declaration of trust gets used to state the basic terms of your trust. It passes your estate directly on to your heirs.
Last Will vs Living Trust
The main difference between a living trust and a will is that a trust will pass your property without going through probate court. Your loved ones will not incur any court expenses after it is established.
A trust names someone as a beneficiary to control the disbursement of assets, rather than the court. The property can be passed quickly along to your loved ones.
Another main difference between the two is privacy. A will becomes public record after you pass, and a living trust keeps the information between yourself and your family.
There are also, however, extra steps that must get taken when you create a living trust that isn’t required with a will. You will need, for example, to have your trust signed and stamped by a notary public.
Another important step when creating a living trust is that property must be transferred into the trust before you can leave it to someone else.
Titled assets, for example, must get retitled. This includes real estate. Retitling the deeds to your property is usually not a complicated process.
Another main difference between the two documents is that a will can appoint a guardian for your children and a living trust cannot. Wills can also appoint someone to manage the property left to your children while a living trust cannot.
Living trusts can also be more complex than wills to create and may require the help of a lawyer. Wills that are more complicated or nuanced will also require professional assistance.
When You Need a Last Will vs. Living Trust
You must have a will if you have minor children living with you so you can properly appoint a guardian. You won’t want to put a court process in the hands of your loved ones in addition to the other pain they’ll be experiencing.
A will is also helpful for writing out your funeral wishes and designating owners for smaller property items. This could include your fine china or jewelry and who you want to leave them to.
Some people prefer a living trust because it allows them to transfer assets without putting their loved ones through the time and expense of probate court. It’s also possible to change it while you’re still alive, so many people like that flexibility.
Oftentimes, folks will choose to have both a living will and trust that they use to give instructions about different types of property. It can put their minds at ease as they think about what’s to come.
Taking Care of the Future
It can seem negative or morbid to think about your will or living trust. Your loved ones will be grateful, however, for the clarity as to who will get your assets.
You can also avoid your assets going to people who you don’t want to have access to them, including estranged relatives. It will also give clear direction as to who will care for your children if you have them.
A will can also be a great way to give gifts and charitable donations. This can help offset any estate tax against your assets.
The differences between a last will vs. living trust may seem minor, but they can make a big difference in how you decide to leave your property to your loved ones. With little homework and planning, you and your beneficiaries can face the future with confidence.
Don’t stop planning for tomorrow now. For more information on professional assistance with wills and trusts, contact us today.