Planning your estate is the key to ensuring that your loved ones are provided for after your passing. However, the cost of retaining a qualified estate attorney can be high. While you can execute your estate plan on your own, the legal aspect is inherently complex and near impossible to navigate when you do not fully understand it. Fully knowing your options is the best way to develop a solid strategy for your money and your family.
A last will is a document conveying instructions for carrying out your final wishes after your passing. Wills are versatile, allowing you to define instructions for most legal purposes. As the testator, or the person who's writing a will, you can appoint an administrator to oversee your estate, divide property between your named beneficiaries and establish a trust for managing the assets you bequeath to your beneficiaries.
A living trust is established during the testator’s lifetime. It combines all of your assets as one entity. Living trusts provide the power to manage all real property, investments, cash assets and other interests at once. The testator can name herself as the trustee and take advantage of tax breaks, credits and other benefits during her lifetime. The testator can name a successive trustee to manage and disperse the trust’s revenue among the beneficiaries, or dissolve the trust and bequeath its assets to individual beneficiaries, after the testator's passing.
Both living trusts and last wills are used in estate planning; each serves separate but complimentary functions. A will defines a testator’s instructions, not only for the management and administering of his estate, but for the care of his surviving family, friends and business, funerary arrangements for himself and anything else the testator leaves behind. Living trusts are solely for managing the estate’s assets, including real property, investments and business interests. A testator who stands to leave behind a spouse and young children needs a will to plan for the future. A living trust, however, can protect the estate’s real and monetary assets, provide financial support to surviving relatives and allows the testator to take advantage of various tax breaks, leaving more money for his family while protecting the family’s financial privacy.
A basic will for a simple estate can often be prepared with little assistance. A will also offers more flexibility, allowing you to arrange care for your minor children, appoint a trustee, provide funerary directives and define instructions for anything else. Living trusts offer the benefit of avoiding probate proceedings, so you can maintain your privacy even after death and save your family potential hassles. Living wills are also inherently harder to contest, keeping your assets safer and in the hands of intended beneficiaries. Additionally, a living trust offers various tax breaks of which you can take advantage during your lifetime, while your family can continue enjoying the benefits after your passing.
A will typically go through probate, which makes it and the subsequent proceedings a part of the public record -- an objectionable point if you want to keep these matters private. Probated wills are also subject to challenges from outside parties, included disinherited relatives, and a minor issue can stall the process for months or years. On the other hand, living trusts are limited in function and do not extend any medium for providing other instructions. While you can provide financial support for your children, you cannot appoint a guardian or define instructions for their care after your death. Living trusts are explicitly for managing property and assets, forcing the court to administer the remainder of your estate following intestacy guidelines.