When it comes to estate planning, the primary options people end up choosing between are a living trust versus will. While both allow you to define how your property and other assets are distributed after passing away, upon closer examination, there are significant differences between the two. Learn what they are to see which one better fits your life situation.
Again, wills and living trusts are designed to provide legal documentation for how to divide up your assets amongst heirs. While wills are normally simpler to setup and initially cheaper in cost, they do leave much to be desired when compared to a properly structured living trust.
Living Trust and Will Overlaps:
- Both provide you the legal means to distribute your assets amongst family and loved ones
- Both allow you to appoint a legal guardian if you have minor children (note: in a living trust, this is only possible if your documentation includes a pour-over will)
Although these overlaps are helpful, the comparisons end there. Living trusts, on the other hand, offer advantages that normal wills cannot compete with:
- Avoid probate costs and time associated with their proceedings
- An assigned trustee is in charge of distributing your assets instead of a probate judge; in essence, you choose who handles the transactions instead of a judge you don’t know
- Assign asset titles directly into the documentation
- The terms are kept private and confidential, not released as public record
- Assets can be distributed without the need to hire and pay an attorney
- For real estate investors, you can deal with all of your properties in your home state instead of each separate state
Points to Consider:
After looking at how much more flexible trusts can be versus regular wills, there are two important points to consider:
Living trusts require more initial paperwork and costs upfront; however, these early investments secure greater freedom and flexibility in how your affairs are settled. Be sure to examine your assets and see whether or not they would be managed better through a trust with the aid of an assigned trustee, or if it would be easier to have a family member handle everything through power of attorney.
While wills can and do handle estate planning needs and can handle matters if relatively simple and straightforward; if you need greater flexibility and want to minimize interference by outside parties then living trusts are the only option. If you are interested in learning how to get your estate plan started, figure out which option is the best fit for you, and begin the process itself, the team at Anderson is available to answer questions on these matters.
Learn from the best in business, whether you want to protect your existing assets, decrease your tax return or prepare for retirement, our Advisors can help with advice that fits your lifestyle. We can help you keep more of your income, no matter how you earn it.