A will, sometimes called a “last will and testament,” is a document that states an individual’s final wishes. It is read by a county court after one’s death, and the court makes sure that one’s final wishes are carried out according to the terms of the will.
A Revocable Living Trust, also known as a Living Trust, is a legal document that is created by an individual to hold and own that individual’s assets, which are in turn invested and spent for the benefit of that individual by the Trustee of the trust, which is usually the individual. A Living Trust covers all three phases of life; life, sickness and incapacity, and death.
Both a will and a living trust contain inheritance instructions, meaning who gets what, when they get it, and how.
A living trust does not need to go through probate. Probate is the process that transfers property upon a person’s death. Typically, it requires a court to get involved and to hear arguments from those who may contest the will. With a living trust, however, this often stressful and costly process is avoided, because assets are technically transferred to the trust before the grantor’s death.
Also, a living trust will not become part of the public record unless a trustee or a beneficiary demands court approval of accounts. Wills are subject to probate records, which are always open to the public.
A trust can be written in a way that can pass assets on to beneficiaries immediately upon death, or assets can be portioned out over time and in amounts specified in the trust. An attorney can help by including tax savings clauses that may aid in reducing state and federal estate taxes. When worded correctly, a living trust can also be used as a substitute for a power of attorney.
A living trust can be disputed or challenged just as a will can be, so it cannot protect against a disgruntled heir. A will costs less to prepare and maintain than a living trust, however the cost of the probate process for a will can be substantial.
Some people choose to have both a will and a living trust; others opt for one or the other. If you are without either, then courts will generally turn to your state’s intestacy law by default, which may not necessarily pan out the way you hoped it would. Contact the experienced Wills, Trusts and Estates attorneys of Christopher B Johnson Law to learn more.