When planning your estate, choosing between a will and a living trust can be confusing. While both serve to distribute your assets after death, they have important differences.

What is a Will?

A will is a legal document that outlines how your assets should be distributed after you pass away. It also allows you to:

•   Appoint an executor to handle your estate after you pass.
•   Name guardians for your minor children.
•   Specify personal gifts, such as family heirlooms or keepsakes.

However, a will still must go through probate, which is a court-supervised process that can be time-consuming and costly.

What is a Living Trust?

A living trust allows you to transfer assets into a trust during your lifetime, which will be managed and distributed by someone known as a trustee after your death. Unlike a will, a living trust:

•   Avoids probate, allowing for quicker and private distribution of assets.
•   Manages your assets if you become incapacitated, since a successor trustee can step in.
•   Offers privacy, as it doesn’t become a public document like a will during probate.

Setting up a trust is more complex and expensive upfront, but it can save time and money in the long run by bypassing probate.

What is the takehome message on Differences between a Will and Living Trust?

1.   Probate: Wills go through probate, while living trusts avoid it.
2.   Incapacity: A will only takes effect after death, but a trust can manage your assets if you’re incapacitated.
3.   Cost: Wills are cheaper to set up, but probate fees can add up. Trusts cost more to establish but avoid probate expenses. Trusts are usually less costly in the long run.

When to Choose a Will

•   You have minor children and need to name a guardian.
•   Your estate is simple and the probate process isn’t a concern.
•   You want a straightforward, lower-cost option for estate planning.

When to Choose a Living Trust

•   You want to avoid probate and distribute assets quickly.
•   You’re concerned about incapacity and need a plan for managing your assets.
•   Efficiency is important, especially for larger estates or businesses.

Do You Need Both Types Of Documents In Your Estate Plan?

In my many years of experience representing clients on estate planning, I find that many people benefit from having both a will and a living trust. A “pour-over will” can catch any assets not included in your trust and ensure they’re distributed according to your wishes.

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