Estate planning is an important process that everyone should go through, regardless of their age or financial situation. It’s a way to ensure that your assets and loved ones are protected after your death and that your wishes are honored. Two of the most commonly used documents in estate planning considered are last will vs. living trust. Understanding the differences between these two documents is crucial in order to make an informed decision about which one is right for your specific situation.
In this comprehensive guide, we’ll take a closer look at the pros and cons of last wills and living trusts and what you need to know when choosing between the two.
What is a Last Will?
A last will is a legal document that allows you to specify how you want your assets to be distributed after your death. It’s an important tool for ensuring that your assets are distributed according to your wishes and that your loved ones are taken care of. In a last will, you can name beneficiaries for your assets, name an executor who will manage the distribution of your assets, and name guardians for minor children.
Advantages of a Last Will
There are two distinct advantages of a last will:
Assets are Distributed According to Your Wishes
One of the main advantages of a last will is that it ensures that your assets are distributed according to your wishes. If you die without a will, your assets will be distributed according to state laws, which may not align with your preferences. With a last will, you have complete control over who receives your assets and in what proportion.
Naming Guardians for Minor Children
Another advantage of a last will is that it allows you to name guardians for your minor children. If you have children who are not yet 18 years old, you can specify in your last will who you want to take care of them in the event of your death. Dying without a will means that the court will decide how your assets will be distributed. This may not align with your preferred choice, making having a will crucial.
Disadvantages of a Last Will
There are also two main disadvantages of a last will:
Does Not Avoid Probate
One of the main disadvantages of a last will is that it does not avoid probate. Probate is the legal process of transferring a deceased person’s assets to their beneficiaries. This process can be long and costly, and a last will does not help to avoid it. In fact, a last will is often submitted to probate court, which can further extend the process.
Another disadvantage of a last will is that it is a public document. Its contents are made known during probate, which means that the beneficiaries and assets named in the last will are made public. This can be a concern for people who value privacy.
What is a Living Trust?
A living trust is a legal document that allows you to transfer ownership of your assets to a trustee while you’re still alive. A living trust does not become effective until you pass away. Therefore, you can make changes to it at any time, unlike a last will. Additionally, you can also name yourself as the trustee and retain control over the assets in the trust until your death.
Advantages of a Living Trust
There are three main advantages of a living trust:
One of the main advantages of a living trust is that it can help avoid probate. Probate is the legal process of transferring a deceased person’s assets to their beneficiaries. Probate can be a long and costly process. A living trust can help avoid it by allowing assets to pass directly to the beneficiaries without the need for probate court.
Retains Control Over Assets
Another advantage of a living trust is that you can retain control over your assets even after you pass away. As the trustee, you can continue to manage your assets while you’re alive and make changes to the trust as needed. This can be especially beneficial for people who want to maintain control over their assets even after they’re gone.
A living trust is also a private document, which means that the contents are not made public during probate. This can be a significant advantage for people who value privacy and want to keep the distribution of their assets and beneficiaries confidential.
Disadvantages of a Living Trust
There are two distinct disadvantages of a living trust:
One of the main disadvantages of a living trust is that it can be more expensive to set up and maintain compared to a last will. It typically requires the services of a lawyer or other professional, which can add to the overall cost.
Another disadvantage of a living trust is that it can be more complex than a last will. It requires a more thorough understanding of estate planning and legal terminology, which can be a barrier for some people.
Which One is Right for You: Last Will vs Living Trust?
The choice between a last will vs a living trust ultimately depends on your specific situation and needs. Consider your assets, the size of your estate, your beneficiaries, and your privacy preferences when making your decision.
If you have a simple estate and don’t mind the potential for probate, a last will may be the right choice for you. On the other hand, if you have a larger estate and want to avoid probate and maintain privacy, a living trust may be a better option.
In conclusion, both last wills and living trusts have their advantages and disadvantages. It’s important to consider your specific situation when making your decision. It’s also a good idea to consult with a legal professional to ensure that your estate plan meets your needs. This will help ensure that all legal requirements are met. Estate planning is an important step in protecting your assets and loved ones. Choosing the right document is an essential part of that process.
The Importance of Registering Your Will or Trust in the U.S. Will Registry
Once your last will or living trust is created, it is important to register it with The U.S. Will Registry. Registration is free. The U.S. Will Registry.org is a database that helps to ensure that your will or trust is easily accessible to your loved ones in the event of your death. By registering your document, you are making it easier for your executor or trustee to carry out your wishes. This will ensure that your assets are distributed according to your preferences. Once registered, store a copy of your will or trust with SideDrawer.com (Free). Having a secured copy online is the most secure way to have a copy located when needed.