None of us wants to think about dying. However, it is important to make plans for when the inevitable happens. If you have children, it is never too early to make arrangements for them if you are no longer here. Both wills and living trusts can be used to put your affairs in order, but how do you know which is best for you?
What is a Will?
Most people have at least a basic idea of what a will is and what purpose it serves. A will is a written document, one that has to be signed and witnessed, which indicates the final wishes of an individual. A will can specify how an individual wants their estate and possessions to be divided up after they die, as well as any final wishes and other messages they want to express.
An individual with a will can revoke or amend their will whenever they please. They can also use it as a way of specifying a chosen guardian for their children.
What is a Living Trust?
A living trust is used to manage the property while someone is alive and after they have passed away. Individuals who act as their own trustee will need to elect a successor in the event of death or incapacity. If they do not elect a successor, there will be a trust instrument for deciding on a successor that will avoid the need for a court judgment.
If the trustee dies or is incapacitated in some way, the successor trustee will take over management of the property. This makes it possible to avoid the inconvenience, expense, and publicity if the court has to supervise the distribution of your estate. You can even hire trust administration services to administer your trust for you for extra convenience.
Wills Vs. Living Trusts
There are a number of things that you need to consider when deciding whether you will be best served by a will or a living trust. In addition, there are a lot of circumstances in which a living trust is preferable to a will, but it is important to understand that a living trust will be more expensive upfront and will require more effort.
First of all, consider whether informal probate is an option. In most states, there is a process for an expedited or simplified form of probate designed specifically for estates that lie under a particular dollar price threshold. Note that the exact dollar threshold will vary from state to state. If your property qualifies for expedited probate, or your state has rules that make obtaining a probate a relatively straightforward process, a will might be the better option.
If you don’t want to have to take on the responsibility of actively managing your estate plan, a living trust is probably not the best solution for you, a trust is only going to be of benefit if you transfer assets into it.
Both wills and living trusts are great ways of ensuring that your estate and possessions are in order before you die. The best one for you will depend on your individual circumstances. Hopefully, the above guide clears up any questions you have.