No matter what your station in life, there will be an estate to care for in the event of your death. Whether you have saved hundreds of thousands of dollars or you own a modest home, you want to make sure you get to decide what happens to your estate. This is why we prepare a will or living trust while we are still alive and healthy. But what is the difference in preparing a will or a living trust? How much do they cost and who sees to it they are carried out?
Will
A will is a document you prepare that explains how your property, money and possessions will be distributed. A will must be signed and witnessed. You decide who gets your property and money and you appoint someone to carry this out.
You also appoint someone to care for your minor children in the event of your death. Upon your death, your assets are transferred to your beneficiary.
You have the right to revoke or cancel a will at any time. This is the most popular option and one of the most cost effective.
Once a will is prepared you do not have to maintain it unless your situation or ideas of distribution of your assets change.
Living Trust
A living trust is a document you prepare that explains how your property and money are distributed and you assign a person to carry those instructions out. You transfer your property and assets to your beneficiaries in trust while you are still alive. The trusts are distributed to your beneficiary upon your death (If that is how you designed it.) You name the legal guardian for your minor children. Because this is done in trust, you do not have to allow your assets to go into probate immediately upon your death.
A living trust has to be maintained during your life as savings, investments and changing entities are included. That makes a Living Trust to be more costly than a will.
A living trust means you do not have to allow your distributions and property values to go public. When living trusts is prepared, it requires the signature of a Notary. If you make create an irrevocable trust it cannot be changed after it is finalized. Wealthy people normally use this option to shield assets from taxes. However, a revocable living trust or a will can be changed if your situation changes.
Of the two a will is much easier to make and to carry out than a living trust. This is a factor in why a will is the least expensive way to prepare for your death.
Regardless of the document type you choose, taking control of your finances and assets before your death is the best gift you can give your family.
