You’ve probably heard a bit about the usefulness of tools like living trusts and wills for your estate plan. However, it’s important to note that these terms don’t refer to the same items—each serves a different purpose, and therefore you must have an understanding of how each works to get the most effective use out of them.
Here’s some information from a will and trust lawyer in Phoenix, AZ about the differences between these two tools and their benefits:
- Beneficiaries: Both living trusts and wills allow you to leave behind property to your chosen beneficiaries. In a will, you describe the property and list who will get that property. A living trust is a bit more complex in that you name the beneficiaries, but also transfer that property into the trust for safekeeping.
- Young children: Children under the age of 18 cannot legally own property of any real value. If you leave property behind to a minor in your estate plan, you must arrange for that property to be managed by an adult until that child reaches the age of majority. You can do this with both a will and a trust. With a living trust, the trustee manages the property until the child reaches a certain age. With a will, you must name an adult to manage the property, or use the will to set up a testamentary trust. You can also name a custodian for the possessions under the Uniform Transfer to Minors Act through your will.
- Probate: One of the biggest goals associated with the estate planning process is to avoid probate as much as possible. This is one of the big differentiators between living trusts and wills. Property left in a living trust will not pass through probate, but property left through a will does. This means you can expect it to take longer for your beneficiaries to be able to receive their property if you solely use a will to pass on your assets.
- Privacy: A will becomes public record after your death, whereas the contents of a trust remain private. Therefore, if your privacy is of concern to you at all, you can benefit more from the use of a living trust than from a will.
- Revisions: Both revocable living trusts and wills allow you to revise the document whenever you want, as long as you have the testamentary capacity necessary to do so. Irrevocable living trusts are a type of living trust that cannot be changed after established, and have more tax-shielding benefits. They are tools generally used by extremely wealthy individuals looking to avoid estate taxes.
- Guardianship: You can use a will to name guardians for your minor children, or for adult children with disabilities. You cannot do this with a living trust.
- Court challenges: It’s not particularly common for people to challenge a will or a living trust, but it does happen. If it does, it’s significantly harder to be successful in a challenge to a living trust than it is with a will.
For more information about the differences between living trusts and wills and the benefits of each type of estate planning document, we encourage you to contact a will and trust lawyer in Phoenix, AZ at Lyman Law Office today.
Categorized in: Wills and Trusts