Difference Between Living Trust & Wills
Most individuals, regardless of financial status, have assets and some type of "estate." Living trusts, wills and living wills afford us the opportunity to protect those assets however we see fit. These legal documents serve specific purposes for "disposing" of an "estate." You can have all three or any combination thereof.
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Function
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Living trusts are primarily for transferring and managing property. They help avoid probate, maintain privacy and lower some estate taxes. Living wills allow individuals to specify their medical preferences should they become incapacitated. Wills detail how someone's "belongings" are to be distributed upon their death.
Features
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Each document designates someone to carry out your wishes. Wills appoint an "executor" to guarantee your directives are "executed." "Successor trustees" fill this role with a living trust while a living will authorizes a health care "proxy" to make your medical decisions.
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Benefits
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Generally, there courts aren't involved with a living will or trust thereby avoiding probate. Living trusts also provide financial assistance in case of your incapacitation. The "successor trustee" would handle any financial obligations eliminating the need for a legal guardian.
Considerations
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Consider a will if guardianship for minors is an issue or you have property to distribute. Living wills should be considered if specific medical or end-of-life directives are to be followed. Living trusts are recommended for quickly transferring property.
Misconceptions
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An attorney isn't needed to prepare these documents unless a sizable estate involving money or property is involved. The document, however, must be signed before a notary public and several witnesses.
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