Last Will vs Living Trust: Breaking Down the Differences

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.

Additional Differences

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.

Moving Along

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.

Dying Without a Will: 4 Things to Know in Wisconsin

dying without a will

When someone dies without a will, the question eventually is asked, “who receives the deceased’s estate?” Wisconsin has  intestacy laws that dictate who receives the deceased’s assets when there is no will. (This is one of the key reasons to draft a will; a person can name beneficiaries to receive assets.) This post highlights key points that family members should know about the situation when a person dies without a will. For information specific to the exact situation, consult an  experienced estate planning lawyer.

The exact distribution of the assets depends on the spouse and descendants.

When a deceased person is survived by a spouse and descendants, it is important to know the difference between community and separate property. Community property applies to assets acquired during the marriage (with a few exceptions). Separate property might include assets acquired before the marriage or by inheritance.

There are several inheritance situations that apply when a deceased’s spouse and children are alive:

  • If there is only a spouse, the probate estate goes to the spouse.
  • If the descendants are the deceased’s and spouse’s, the probate estate goes to the spouse.
  • If the descendants are the deceased’s, but not the deceased’s and spouse’s, the probate estate is split between the spouse and the descendants.

Descendants eligible to receive the deceased’s estate include biological and adopted children. Stepchildren not legally adopted by the deceased and biological children adopted by another party are not included in the estate distribution.

There is a procedure for situations where the deceased is not married.

When the deceased is not married and does not have any descendants, there are two common inheritance situations:

  • If the deceased is survived by their parents, the parents inherit the probate estate.
  • If the deceased is not survived by their parents but is survived by their siblings, the siblings inherit the probate estate.

There are exceptions to these situations, such as if a relative intentionally causes the deceased’s death or does not live 120 hours after the deceased’s death. To see if other exceptions apply, you should speak to an experienced estate planning lawyer.

Some assets may not be included in the estate.

Not all assets are part of the inheritance. If the asset is part of a living trust or is an asset with a named beneficiary, the asset goes to the named beneficiary. Some real estate, 401Ks, and other accounts may not follow intestate succession.

The materials on this website are provided for informational purposes only and do not constitute legal advice. These materials are intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future results. Transmission of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship between sender and receiver. You should not act or rely on any information contained in this website without first seeking the advice of an attorney.

8 Questions to Ask Before Drafting a Will

will document that brings up estate planning questions wiDrafting a will is an important estate planning step, and one that does require some preparation. We’ve assisted many Wisconsin clients drafting a will; while hiring an experienced estate planning lawyer ensures that the document is legally sound, asking a few of the right questions at home can assure that the will is accurate and complete.

Who do I want to appoint as guardian of my children? What is that person’s personal information?

Selecting a guardian for your children and other minors when you pass away is not a decision to be made lightly. The right guardian should be an adult, incredibly trustworthy, and should fit all the criteria of a capable guardian. Once you have chosen the right party to be guardian, have their full name and personal information with you when you visit your attorney.

Who are the beneficiaries that I want to receive my assets? What is their personal information (i.e. social security numbers, address, etc.)?

A beneficiary is a party (i.e. individual, charity, etc.) that should receive the assets listed in a will. A will can include instructions to divide the assets equally between beneficiaries or provide specific instructions on individual assets. When scheduling an appointment for drafting a will, have an idea of any specific instructions before visiting an attorney.

Are there any assets that I want to pass on to a certain individual, such as an heirloom piece of jewelry?

One of the most common estate planning mistakes we see is people who give verbal instructions to a beneficiary without including any written instructions in a will. Depending on the situation, this can lead to hard feelings and improper execution of verbal instructions. Unfortunately, verbal instructions are not legally binding, meaning that there is no legal way to ensure that they are followed. Instead of simply telling a beneficiary they can have a prized item, include a written instruction in a will; it’s the best way to ensure that all wishes are followed.

What assets should be listed in the will? Do I have information about those assets (i.e. bank account numbers, lock box information, etc.)?

Not all assets need to be listed in a will. For those assets that should be included in the will, compile pertinent information about the asset, such as the holder and number of a life insurance policy. All information needs to be given to a lawyer during the will drafting process.

Who do I trust to carry out the instructions in my will?

One of the key parties listed in a will is an executor. The executor is charged with the task of distributing assets and carrying out wishes listed in the will. An executor should be extremely honest and organized. The executor does not need to be a family member; it can be anyone you trust with the responsibility. Choose the executor carefully and discuss the decision with all relevant parties to make the process easier when the will goes into effect.