Wills and living trusts are two common estate planning tools you can use to transfer assets to loved ones. The importance of a will and a living trust is that they provide a clear, enforceable way to provide for your family and plan your legacy.
Let’s explore the difference between a will and living trust so you can decide which one may work for you.
What Is a Will and Living Trust?
A will is a legally-binding document that provides final instructions for your affairs after death. With a will, you can:
- Instruct how to distribute your assets;
- Name someone to handle your estate;
- Appoint a guardian for any minor or disabled children; and
- Make funeral arrangements.
Each state has its own rules for making a will valid. In Florida, for example, a will is only enforceable if it’s in writing, signed by the testator (the person who created the will), and witnessed by two people. You can change your will at any time during your life, but it goes into effect as soon as you die.
A living trust is a legally enforceable document that allows you to use your assets during your lifetime and distribute them at death. The hallmark of a living trust is that your assets will transfer without having to go through the probate process. Here’s how it works.
First, you (the grantor) create the trust document that spells out the rules for how the trust must function. Next, within the document, you appoint a trustee and successor trustee, who manages the property you put into the trust. Typically, you name yourself as the initial trustee so that you can use and control the trust property while you’re alive. After your death, the successor trustee will manage the property for the benefit of whomever you name as the beneficiary. Lastly, to make the trust valid, you must fund the trust by transferring ownership of any property to the trust. Your living trust goes into effect as soon as you sign and fund it.
Revocable and irrevocable living trusts
Living trusts come in two forms: revocable and irrevocable. Revocable living trusts give you the ability to change and even cancel the trust anytime before you die. At your death, the trust becomes irrevocable and cannot be altered. If you creat an irrevocable living trust instead of a revocable trust, then you have less ability to change the terms, and typically, you need all beneficiaries’ and trustees’ consent or a court order. There are significant tax benefits to irrevocable trusts, but you may lose some or all control of the assets you put into the trust. You should consult with an experienced wills and trusts lawyer before creating one.
What Is the Difference Between a Will and a Living Trust?
Although wills and living trusts are both ways to distribute assets after death, they are quite different from each other.
Probate is the legal process of collecting and distributing a person’s assets after they die. It can be time-consuming and costly, which is why many people try to avoid probate. When you put assets into a trust during your lifetime, the beneficiaries avoid probate because the assets transfer via the trust terms without the need of court intervention or oversight. Any assets subject to the terms of your will can only transfer by going through probate. Avoiding probate is one of the main reasons why people use living trusts.
Creation and Maintenance
Wills are much easier to create and maintain than trusts. For example, trusts need to be funded with property and assets. If you want to put your home into the living trust, you have to change the deed to reflect the trust as the owner.
With a will, nothing happens to your property until you die. However, the general rule is to revisit your will every three to five years or if a significant event occurs, like a divorce or having a child. It’s important to keep your will up to date.
Public Versus Private Asset Distribution
When you use a will to distribute assets, the process becomes public. As soon as someone files a petition to probate the will and the estate, everything is public record. Using a trust to distribute assets is a completely private transaction.
To learn more about the differences between a will and a living trust, speak with one of our planning lawyers at Beller & Bustamante, P.L.
Can You Have Both a Will and a Living Trust?
Absolutely. With proper planning, these two documents can work in conjunction to create a seamless transfer of assets. One way to include both a will and a living trust into your estate plan is to create a pour-over will. With this type of will, anything left in your estate at death (outside of the living trust) will pour over into your trust. The pour-over will is like a safety net to ensure all of your assets wind up in your trust when you die.
How Do You Create a Will and Living Trust?
With the help of an estate planning attorney, you can create a will and living trust. While there are living will and trust forms available online, they are often full of errors and overlook personal details about your estate. Using templates or online services could cost your family unnecessary time and money if they have to go to court over the validity of the will or living trust.
Contact the Estate Planning Lawyers at Beller & Bustamante, P.L.
Since wills and living trusts offer different benefits, it’s difficult to say one is better than the other. It truly depends on your financial situation, family dynamics, and goals. Let the attorneys at Beller & Bustamante, P.L. help you create a will or living trust that’s right for you and your family.
With over 40 years of combined legal experience, we take the time to learn about our clients so we can craft an estate plan that meets your specific needs and goals. To schedule a consultation, please call our Jacksonville law office or contact our attorneys online.