The Differences Between a Will & a Living Trust
In making an estate plan, you may seek to obtain a last will and testament (also known as a "will") or a living trust, or a combination of both documents. Each document is different, and this article will explain the differences.
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What Is a Will
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A will is a document that provides specific instructions for the distribution of your property upon your death. A will becomes effective upon the death of the individual who created the will. In addition, a will may contain other provisions to ensure that your wishes are included in the document, such as specific last requests and guardianship of children. Furthermore, a will allows for the appointment of an executor who will distribute the property according to the provisions in the will. Moreover, a will must be signed, witnessed and acknowledged by a notary public. A will can be changed at any time prior to your death. Finally, upon your death, the will usually goes through probate, which is the function of the court to review and oversee the proper dispositions of property.
What Is a Living Trust
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A living trust is a mechanism created by a written document that places your assets into a trust. This trust becomes effective immediately upon the creation of the trust itself. Under a trust document, a trustee is appointed. A trustee is a person who controls the trust and therefore controls the property contained in the trust. The trust document specifies exactly how your assets shall be distributed upon your death. A living trust can be revoked and may be modified. In addition, property can be added to the trust at any time. Moreover, a will must be signed, witnessed and acknowledged by a notary public.
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Differences Between a Will and a Living Trust
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A will and a living trust are two separate and unique documents. Consequently, there are various differences between the documents. Initially, when a will is filed with a court for probate, the will becomes a public document. Conversely, a living trust remains private and therefore does not become a public document. In addition, a will permits provisions pertaining to the guardianship of children while a living trust does not contain such provisions. Furthermore, a will may specify your last wishes such as burial requests and/or specific funeral arrangements, while a living trust does not contain such matters. Moreover, when a living trust is utilized, the property passes to the designated beneficiaries immediately upon the death of the person who set up the trust. A will is subject to the probate process, which can be quite lengthy and results in the distribution of property long after your death.
Advantages of a Will
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The use of a will has several advantages. Initially, the use of a will is beneficial in that it allows of the inclusion of guardianship of children, so that you can effectively provide for this situation. Moreover, a will permits you to have freedom to pass your assets to whomever you would like, as opposed to having the property pass according to the laws of the jurisdiction if you die without a will. (Note that there is an exception in many states where a spouse cannot completely leave a spouse out of a will.) In addition, a will allows you to state any special requests upon your death.
Advantages of a Living Trust
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The use of a living trust also has its advantages. A living trust avoids probate fees, which include court filing fees and attorneys fees. Frequently, people seek to minimize the financial burden of these fees on their heirs. Additionally, a trust remains private so your affairs are handled accordingly and the information does not become accessible, public information. Furthermore, a trust may assist in avoidance of taxation if drafted properly with such a goal. Moreover, the person setting up a living trust can serve as the trustee to the trust, thereby retaining full control over the trust. Finally, property that passes through a living trust passes immediately upon the death of the individual who created the living trust, and therefore the heir does not have to wait to receive the property.
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