Estate planning is an important part of financial planning, and it can be complicated. Living trusts and simple wills are two of the most common estate planning tools. Both have their own advantages and disadvantages, so it is important to understand the differences between them before making a decision.
The Difference Between a Will and a Living Trust
While both documents provide for the distribution of assets after death, there are some key differences between them. A living trust is a legal document that allows you to transfer ownership of property or assets during your lifetime. This allows you to avoid probate court and ensures that your wishes regarding the distribution of those assets are followed after death. A will, on the other hand, only takes effect after death and must go through probate court so it can be executed.
The main difference between a living trust and a will is when they take effect and how they are handled after death. The former takes effect during life while the latter only takes effect after death and must go through probate court for it to be executed.
In addition, with a living trust you can protect some of your assets from creditors and litigation after death, whereas wills do not provide such protection.
Although wills have been the norm for many years, it may not be the best option for most people.
Living Trust Advantages
Since a living trust can help you avoid probate court, your assets are distributed more quickly and efficiently than if you had gone through the probate process. Additionally, it can offer more privacy than a will since the details of the trust are not made public in probate court proceedings.
Living trusts also provide greater flexibility when it comes to managing your assets during your lifetime. You can choose how much control you want to have over your assets and who should manage them in case of illness or incapacity. Living trusts provide better protection against creditors and lawsuits since they are not subject to probate proceedings or public scrutiny.
Other advantages include:
- You can use a living trust regardless of the size of your estate.
- There are federal and state tax advantages.
- As long as the trust is funded, your assets cannot be frozen.
- A living trust may have more up-front costs, but it will probably be cheaper than probating a will.
If you are considering a living trust, you need to hire an experienced attorney. There are many pitfalls in estate planning with a living trust. You want to avoid those online “living trust kits.” They don’t cover all the scenarios involved in setting up and managing a living trust.
Winton Law El Paso P.C.
1533 N. Lee Trevino Suite 201
El Paso, TX 79936
Hours: Monday – Friday 8:00AM to 5:00PM by appointment only
Disclaimer: Every effort has been made to ensure the accuracy of this article at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ, and the law may have changed since publication. Readers considering legal services should consult with an experienced lawyer to understand current laws and how they may affect your case.