Wills vs. Living Trusts
Understanding wills vs living trusts is an important part of growing older. Comparing wills and living trusts can be a tricky process, as the two are very similar. This can make it difficult to determine which of the two is the best option for you. Therefore, it is important to know what makes a will and a living trust different and similar and what the advantages and disadvantages are. Learn more about wills and trusts by reviewing the sections below.
What are the differences between wills and living trusts?
Comparing wills and living trusts can help you understand the differences between them. A will is a legal document that distributes property and belongings after someone’s death. A living trust is very similar to a will in that it also allows the testator, or the creator of the will, to dictate how he or she wants to divide property and assets after passing away. However, those comparing a will and a living trust will find that a living trust differs in that it goes into effect immediately, whereas a will only goes into effect once the testator has died. Those deciding on a will versus a living trust, however, should also consider certain other factors.
Seniors wondering, “Do you need a will or a living trust?” should keep in mind that living trusts also do not have to go through the probate process. This essential difference between a will and a living trust means that the property included in the trust can be distributed faster, as the distribution will not need to be supervised by a court. Seniors comparing wills and living trusts may also find the latter beneficial, because the validity of the document does not need to be proven. This is because living trust testators turn over their property to a trustee while they are still alive. Typically, the testators themselves are the trustees, but they can designate another trustee if they wish. Learn more about these documents by downloading our comprehensive guide.
What are the similarities between wills and living trusts?
Comparing wills vs living trusts shows that, while they have several differences, they also have much in common. Both wills and living trusts allow you to determine how you want your debts, properties and assets to be distributed after your death. If you are wondering, “Do I need a will or a living trust?” keep in mind that both documents require you to appoint someone to manage them. In regards to a will, this person is called a will executor, and in a living trust, the person in charge of managing the trust is called a trustee or a successor trustee. One notable similarity between wills vs living trusts is that you do not need a lawyer to create them. However, it is important to remember that these solutions are designed as general and may not work for your individual needs.
The Advantages of Wills and Living Trusts
When comparing wills and living trusts, there are many advantages to choosing the former option. A will is far more flexible in terms of what you can include in it. In a will, you can plan more personal matters, such as funeral arrangements and how you want your children to be raised.
If you set up a living trust versus a will, it can benefit you if you ever become incapacitated. This is because you are able to name your successor trustee to take over managing your trust if you are ever unable to do so. Without this secondary trustee, your belongings would fall to someone else to manage without your consent.
Seniors choosing between a will and a living trust should keep in mind that living trusts can also be a better option if the senior is likely to suffer from Alzheimer’s or other forms of dementia. Living trusts compared to wills will give seniors a chance to determine what to do with their property and belongings while they are still able to make those decisions, as well as appoint someone to take over when it becomes necessary.
The Disadvantages of Wills and Living Trusts
When comparing wills and living trusts, you will find that the main disadvantage of a will is that it is subject to probate before it can be put into effect. This means that the property and assets listed in the will cannot be distributed until a judge has legally determined that the will is valid.
On the other hand, living trusts can be more expensive to set up and maintain than a will. Of course, the cost of setting up a living trust will vary from person to person, as the price is based off a number of items, including what a lawyer will charge to discuss and create the trust.
For more information on the advantages and disadvantages of wills and living trusts, download our in-depth guide.
Do you need a will or a living trust?
While you are not legally required to have a will or living trust, it can be beneficial to create them, depending on your situation. Both a will and living trust determine what will happen to your possessions after you die, so if you already have a will, you may not need to have a living trust as well. However, if you have a living trust, but not a will, it is important to write one to avoid the consequences of passing away without a will.