Whether you have planned your estate or you haven’t even thought about that process yet, you have probably still heard the terms “Will” and “Living Trust.” These phrases may confuse you. After all, what is a Will? What is a Living Trust? Which is better—Living Trust or Will? You might have so many questions that you’d rather avoid the topic completely.
That’s why we’ve gathered the answers to some of your most pressing questions about these important documents. Read on to learn how a Living Trust and a Will can help you in your estate planning process.
Living Trust vs. Will
Trusts and Wills clearly spell out the rights of beneficiaries and responsibilities of legal guardians or executors of estates. But a Trust varies from a Will in a few key ways.
A Will and a Trust are separate legal documents that often are set up to attempt to accomplish the same goal and often may work together during an estate plan. A Will is simple, straightforward, and instructs on how to distribute assets to beneficiaries after your death. A Trust is more complex, in which you can elect a trustee to help transfer your property to beneficiaries at any time. A Living Trust generally supersedes a Will, but a Will may sometimes override specific types of Trusts.
What is a Living Trust?
A Trust protects your possessions and your beneficiaries (the people who you want to inherit your property). If your beneficiaries are minors or otherwise currently unable to manage your property, your trustee will manage it until they are ready. Your Trust also protects your assets from entering the court probate process.
When you create a Living Trust, you become the settlor of that Trust. You give a trustee the responsibility to hold and manage property or assets on behalf of a beneficiary. The trustee is then legally obligated to manage your property that you have included in the Trust, according to your wishes.
As the settlor, you get to specify which assets your beneficiaries will receive, as well as when and how. Since a Trust avoids the probate process, your heirs may be able to receive ownership of your property more quickly with a living Trust than with a Will.
How much does a Living Trust cost?
It’s recommended to have a lawyer draft your Living Trust with you. This can cost anywhere from $1,500 to $3,000 or more, depending on the complexity of your estate and assets.
What is a Will?
A Will is another legal way for you to decide which heirs will receive which assets, how to distribute donations, what to do with minor children and pets, and more. While a Will is generally straightforward and simple, you do have a few different types of Wills to choose from. We lay it out more thoroughly in this article; but for now, here are the basics.
- An Oral Will is spoken aloud instead of written down. This is handy if you are in an emergency; however, it may not be held valid in court.
- A Simple Will is the most common type of Will. You get to decide what will happen to your property, who will care for your dependents, and whether you want to leave money to charity.
- A Joint Will lets you and another person—typically a spouse or legal partner—decide together what will happen to your possessions. If you want to leave your assets to your partner, a Joint Will is the way to go.
- A Mirror Will is another type of partner-specific Will. You and your spouse/partner create your Wills together, making them practically identical so that if one partner dies, the other will inherit everything.
- A Holographic Will is entirely handwritten and signed by you. That means it has not been typed out or witnessed by anyone. Since there are no witnesses, it may be hard for a Holographic Will to be held valid in court.
- A Living Will is a document you use to outline your medical wishes in case you become incapacitated. You get to specify your wishes for medical care, important decisions, caretakers and more.
Is a Trust better than a Will?
These separate legal documents each play crucial roles in managing your assets. A Living Trust generally supersedes a Will, but a Will may (in some instances) override a specific type of Trust. However, Wills and Trust generally work together to accomplish the same goal that you have in mind.
What should you do next?
Get the legal help you need! You don’t have to try to figure out by yourself whether you need a Living Trust, a Will, both, or something else entirely. When you become a LegalShield Member, your provider law firm can work with you to create the estate plan you need.
Read more about Trusts in our “What is a Trust?” blog post to get more acquainted with how a Trust may differ from a Will. Find out how LegalShield can support you when setting up your estate plan.
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