You've worked hard for your money, and made every attempt to be a conscientious
saver. So it's only natural that you want some control over what happens to your assets in the event
of your death. At the very least, you probably want to minimize or avoid potential hassles and headaches
for your loved ones. So, you may find yourself asking, "What is the difference between wills
and living trusts?"
What Is The Difference Between Wills and Living Trusts?
First, you must know that
estate planning deals with what happens to your assets after you die. Even if you are a person of
modest means, you have an estate — and several strategies to choose from to make sure that your
assets are distributed as you wish and in a timely way. The right strategies depend on your individual
circumstances. That is, what is best for your neighbor might not make the most sense for you.
Misinformation and misunderstanding about estate taxes and the length
or complexity of probate provide the perfect cover for scam artists who have created an industry out
of older people's fears that their estates could be eaten up by costs or that the distribution of their
assets could be delayed for years. Some unscrupulous businesses are advertising seminars on living trusts
or sending postcards inviting consumers to call for in-home appointments to learn whether a living trust
is right for them. In these cases, it's not uncommon for the salesperson to exaggerate the benefits
or the appropriateness of the living trust and claim — falsely — that locally-licensed lawyers
will prepare the documents.
Be a Smart Consumer -
Know The Difference Between Wills and Living Trusts!
Other businesses are advertising living trust "kits": Consumers
send money for these do-it-yourself products, but receive nothing in return. Still other businesses
are using estate planning services to gain access to consumers' financial information and to sell
them other financial products, such as insurance annuities.
What's a consumer to do? It's true that for some people, a living
trust can be a useful and practical tool. But for others, it can be a waste of money and time. What
is the difference between wills and living trusts anyway, and how does it differ from a will? Who
should you trust when it comes to estate planning? And how can you tell which tools and strategies
will work best for your particular circumstances?
Following are some terms and an explanation to help you understand
the difference between wills and living trusts.
A trustis a legal arrangement where one person (the "grantor")
gives control of his property to a trust, which is administered by a "trustee" for the "beneficiary's"
benefit. The grantor, trustee and beneficiary may be the same person. The grantor names a successor
trustee in the event of incapacitation or death, as well as successor beneficiaries.
A living trust, created while you're alive, lets you control the distribution
of your estate. You transfer ownership of your property and your assets into the trust. You can serve
as the trustee or you can select a person or an institution to be the trustee. If you're the trustee,
you will have to name a successor trustee to distribute the assets at your death.
The advantage of a living trust? Properly drafted and executed, it can
avoid probate because the trust owns the assets, not the deceased. Only property in the deceased's
name must go through probate. The downside? Poorly drawn or unfunded trusts can cost you money and
endanger your best intentions.
A will is a legal document that dictates how to distribute your property
after your death. If you don't have a will, you die intestate, and the law of your state determines
what happens to your estate and your minor children. The probate court governs this process.
A living trust is different from a living will. A living will expresses
your wishes about being kept alive if you're terminally ill or seriously injured.
If you have any questions about the difference between wills and
living trusts, contact Attorney Mark Seff today!