What Is the Difference Between a Last Will & a Living Trust?

By Beverly Bird

Unlike a last will and testament, a living trust does not have to pass through probate when you die. You create a living trust while you are alive and transfer all your property into it. The trust owns it, but you, as trustee, control the trust. You can change the trust or abolish it any time you like, thus these are usually called "revocable" living trusts.

Privacy

Wills are a matter of public record after you die. Anyone can request a copy of your will, and thus can find out exactly what you owned -- or at least what you thought was important enough to bequeath -- at the time of your death. The assets held in living trusts are not public record. If you transfer your assets into a revocable living trust during your lifetime, you no longer own them -- your trust does. Therefore, there is nothing to probate; even though you're dead, your trust is still "alive" and owns your assets. And if there is nothing to probate, there is no public record of your finances.

Court Supervision

When a will passes through the probate process, the court system oversees disbursement of your estate and regulates any disputes by beneficiaries or creditors. The court sets prescribed periods of time during which an heir can object or a creditor can make a claim. A living trust does not enjoy this same protection.

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Flexibility

When you die, property you owned transfers to living individuals through a will or probate. Your trust, on the other hand, can continue holding your property indefinitely. It can wait to distribute bequests until a time of your choosing, such as when your children reach a certain age. It can manage cash accounts and income, and mete out payments to beneficiaries weekly, monthly or yearly -- whatever you choose.

Executors and Representatives

Both wills and living trusts allow you to name someone to oversee your affairs after your death. With a will, this is called an executor; with a revocable living trust, this is called a successor trustee. The trustee is the person who controls the trust; presumably, this is you until the time of your death. Your successor trustee takes over for you. The advantage of a trust is that this can also happen if you are incapacitated for some reason and are unable to see to your own affairs. If you become incapacitated and do not have a trust, the court will name a guardian for you, and this might not be someone you would want to have the job.

Exclusivity

You can have a will without also having a revocable living trust, but it's best not to have a revocable living trust without also having a will. Inevitably, you will own some asset, small or large, at the time of your death that you neglected to transfer ownership of to your trust. When you die, the court will dispose of this asset according to your state’s laws of succession, or the legal order in which your relatives would inherit if you die without a will. So it might be a good idea to also have a “pour over” will, a simple document instructing that upon your death, anything you own -- as opposed to what your trust owns -- should be transferred to the trust.

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The Differences Between a Last Will & a Living Trust

References

Related articles

Is a Living Trust Liable or Subject to Probate?

A living trust holds assets that are managed by a trustee for intended beneficiaries. Also called a revocable trust, it differs from other trusts in that the trust creator, or grantor, can also serve as the trustee and can make changes to, or even revoke, the trust in its entirety during his lifetime. Living trusts are attractive because the grantor retains ultimate control over his assets while he is alive, but they are most commonly used to avoid probate.

Last Wills & Trusts Questions

Last wills and trusts are two ways to pass your property to your chosen beneficiaries after your death. Last wills and trusts can be used separately or together. Answering some basic questions about last wills and trusts can help you understand what kind of estate planning is best for you and your family. Although an attorney's help is not required to create a valid will or trust, it is wise to consult an attorney when doing your estate planning.

Advantages of an Irrevocable Trust

If you’re like most people, you’ll need a really good reason to give up control over the hard-won assets you’ve accumulated during your lifetime. For some individuals, the benefits of an irrevocable trust balance the fact that using one requires relinquishing ownership and control of what they've worked for and earned. The major difference between a revocable trust and an irrevocable trust is that with the latter, its creator names another individual to manage it for him, ceding all rights to do so himself.

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