Jun 27, 2011
Which estate planning document is right for you?
In my effort to plan for my loved ones after I’m gone, I sought the advice of my attorney and learned some key distinctions on estate planning documents that finally made sense to me! What are the differences between living trusts, living wills and last or final will? Read on!
Although living trusts and last wills are both used to distribute property to beneficiaries, there are some important differences between them. One of the key benefits of a living trust is that it limits the probate court’s involvement in property distribution. Unlike a last will, which can be tied up in probate for years, a living trust can quickly and smoothly transfer assets to beneficiaries. Because a living trust is not registered with a court, the estate’s details remain private.
A living trust lets you control who receives your assets after you die. However, this isn’t the only reason to create a living trust. A living trust can offer many benefits to its creator. For example, a living trust can help your beneficiaries avoid the probate-related expenses and delay normally associated with wills. Probate is required if the value of your probate estate exceeds a relatively low amount, which varies by state. Probate can last
longer than two years and may be delayed by factors beyond the control of your beneficiaries, like overcrowded court and attorney schedules. The probate process can cost up to 10% of your estate’s value. Living trusts can provide more privacy than wills. Although wills must be submitted to a probate court – and therefore made public – living trusts need not be. Living trusts may help you avoid certain estate taxes if they are prepared and funded properly.
Finally, living trusts let you choose someone to manage your assets if you become incapacitated. A living trust is not a living will however. A living will is for people who want to specify their wishes for medical care and artificial life support in advance. It does not establish guardianship but does allow you to make decisions regarding life support, pain medication, artificial nutrition, organ donation and how anatomical gifts are
to be distributed, as allowed by the laws in your state. You can also include a healthcare Power of Attorney that appoints someone of your choosing to make medical decisions on your behalf if you are unable to communicate your wishes. A living will is also private, not required
to be registered with the court and is kept between you, your family and your physician.
Lots to consider but not to delay. A little effort and forethought on your part today can provide tremendous comfort to your family in the future.