What is the difference between a Will and a Living Trust?
At any stage of life, having an estate plan in place can provide a sense of control over your finances, and your intentions, should the unforeseen happen. Preparing for your future is the best way to make it easier on your loved ones when they will need it most. While wills and living trusts do overlap, there are several key differences, and it’s important to understand the advantages and disadvantages of each document.
A Will is a written document that directs how your property is to be distributed, who will manage your estate, and who will care for your minor children upon your death. It is important to have a Will in place, regardless of the size of your estate, to ensure that your wishes are carried out. If you do not have a valid Will, the state and its laws dictate who will benefit from your estate and raise your minor children. Wills offer somewhat limited control over the distribution of your assets, and your Will will most likely go through a probate process after you pass away. This court-supervised and highly-structured process has a reputation for being drawn-out and expensive. However, in South Dakota, that is normally not the case.
A Living Trust, also known as a Revocable Trust, is used to own property that will eventually pass upon your death to your named beneficiaries. A Living Trust can offer greater control over when and how your assets are distributed, and its terms will apply to any assets held inside the Trust. The main feature of a Living Trust is that it appoints a Trustee to manage and distribute trust property after your death. Property that passes through a Living Trust does not go through probate, which can save your loved ones time and money.
To leave property through a Living Trust, you must transfer the property into the Trust. Items with title documents, such as real estate, must be retitled so that the owner of the property is the Trust. This is not complicated or particularly difficult, but no transfer of property is required when using a Will.
Can You Have Both a Will and a Living Trust?
Yes, because each document accomplishes different things, you may wish to have both a Will and Living Trust. You cannot use your Living Trust to name an executor or name guardians for minor children, so even if you have a Living Trust, you still need a Will to accomplish those things. A Living Trust also provides privacy protections. After death, if the Will is probated, it becomes a part of the court file, while a Living Trust does not, so many people choose to use a Living Trust to keep their affairs more private.
Most people need a Will, but not everyone needs a Living Trust. Whether or not you need a Living Trust depends on many factors including your age, your assets, and whether you’re married. If you decide that you need a Living Trust, you should also draft a will to name an executor, name guardians for minor children, and take care of any property that doesn’t end up in your Trust. In the event of unforeseen tragedy, failing to draft a Will or a Living Trust means your property will be distributed according to the laws of your state.
By understanding the basics of estate planning, you can work to ensure your family and your assets are protected, and that your wishes are enforced in the event of your illness or death. Woods Fuller has an experienced team of estate planning attorneys who can help guide you through the process.