There seems to be a lot of confusion about the difference between “wills” and “trusts.” It’s completely understandable. Estate planning terms like “will” and “trust” aren’t top of mind for most people. However, knowing what these terms mean and what the differences are is crucial when it comes time to plan for the future of your estate.

This article will define “living trusts” and “living wills,” explain the benefits of both, the core differences between the two, and why estate planning is so vital for people of all ages.

“Living Wills”

Many of us think of “wills” as legal documents that people transcribe on their deathbeds to coordinate the division of their assets. It’s viewed as an essential step in the final stages of a person’s life, either from old age or sickness.

While it’s true that the last will and testament does direct the division of assets after someone’s demise, there is another type of “will” that has no power after death at all. It’s called a “living will.” A “living will” is a legal document that lets people outline their wishes for end-of-life medical care if they cannot do so personally due to incapacitation.

Here are some of the most crucial benefits of creating a “living will.”

The Advantages Of Using A “Living Will”

Gives Your Loved Ones & Medical Team Direction

When you set up a “living will,” you remove any ambiguity about your desires for end-of-life medical care. If you become incapacitated for whatever reason and cannot communicate with your loved ones about how you want your care handled, a “living will” offers you an insurance policy.

A “living will” gives your family clear, concrete answers about pain management, life-sustaining care, and organ donation. Moreover, a “living will” directs doctors and other healthcare providers to provide the treatment you want.

Prevents Conflict Between Family Members

Another significant benefit of a “living will” is conflict prevention. When a spouse or family member has to make medical decisions for an incapacitated loved one, like whether or not to keep them on life support, conflicts can arise.

These conflicts can quickly become heated and drive a permanent wedge between your loved ones. A “living will” prevents such discourse because your family will not have to fight over what to do. Instead, they can focus on granting your wishes.

It Gives You Peace Of Mind

Another benefit of enacting a “living will” is that it gives you peace of mind about your end-of-life medical care. Although planning out your last days can sometimes feel uncomfortable, it can also be comforting to know that your desires are clearly stated and will be followed when the time comes.

“Living Trusts”

revocable trust text written on a sticky note with calculator and pen around it

A “living trust,” also known as a revocable trust, is a form of estate planning that allows you to control your assets (money and property) while you are still alive. Once you pass away, the assets are distributed by a successor trustee to people or organizations you select within the living trust. If you know anyone that has received an inheritance, it was likely distributed from a trust.

Here are the benefits of a “living trust.”

The Advantages Of Using A “Living Trust”

Helps You Avoid Probate

When a person dies, their assets may be required to go through probate. However, the assets that are held by a living trust can be distributed much quicker by your trustee upon your death. Because your trust, not your estate, holds these assets, they do not have to go through the traditional probate process.

Has A Built-In Back-up Plan

Another core benefit of “living trusts” is that they come with a built-in backup plan. If you become incapacitated, a successor trustee can step in to handle and administer the assets without applying to the courts for authority to do so.

This is ideal for ensuring that your wealth and property are adequately managed during your last days and are divided appropriately upon your passing.

Controls The Distribution Of Your Property

With a “living trust,” you can control how and when your assets are distributed to your beneficiaries. For instance, your living trust can be set up so that beneficiaries cannot access their inheritance until they reach a certain age or accomplish a milestone, like earning a college degree.

Keeps Your Affairs Private

Finally, “living trusts” provide you and your family with privacy. Unlike the probate process, which is a matter of public record, a “living trust” allows you to retain privacy for your family after your death. There are no public records for others to view about the distribution of assets.

Core Differences Between A “Living Will” & A “Living Trust”

While there are some obvious differences between a “living trust” and a “living will,” there are also some less clear differences worth mentioning.

  • A “living will” affects your medical care
  • A “living trust” affects the division of your financial assets
  • “Living wills” are null and void after your death
  • “Living trusts” can have terms, like the duration of the grantor’s or another person’s lifetime, and can hold assets and distribute them after the grantor’s or other person’s death
  • “Living trusts” direct trustees to distribute your assets after your death
  • “Living wills” state your end-of-life health care decisions on record for a healthcare proxy to follow
  • “Living trusts” require you to appoint a successor trustee to manage your assets if you become incapacitated
  • “Living wills” direct a healthcare proxy on how to best care for you if you become incapacitated

The Importance Of Good Estate Planning

family talking about estate planning with a lawyer

While it’s easy to think of a “living will” or “living trust” as something that only the sick and elderly need to worry about, that couldn’t be further from the truth. Regardless of health or age, everyone can benefit from having an estate plan. In an ideal world, no one would become too incapacitated to make their own healthcare decisions.

However, it’s an unfortunate reality that happens every day to the young and the old. Approximately 1.35 million people die in road crashes each year, leaving their loved ones scrambling to make important decisions about their treatments.

If you do not have a living will and you become incapacitated, your physicians will turn to your closest family members to decide things like whether or not to take you off life support. These decisions can wreak havoc on your family members, further adding to their pain. A “living will” gives them the answers they need to move forward confidently.

Additionally, no one is too young to start thinking about a trust. Even if you amass modest wealth in your lifetime, you want to call the shots about who gets what and when they get it. In the event of your passing, you don’t want the sale of your home to be left up to chance.

If you don’t have a “living trust” set up prior to your passing, your estate will pass through probate. Probate is the process where a court determines who receives your possessions. This can be an expensive and time-consuming process. By placing assets in a living trust, you’re sparing your family the expense and time involved in probate.

Getting Started With Wills & Trusts

To get started with a “living will,” you must determine your healthcare wishes and appoint a healthcare proxy. i.e., power of attorney. Ask yourself questions like, “Do I want to donate my organs?” and “Do I want to be resuscitated if my heart stops beating?”

Additionally, it’s best to find an attorney who focuses on estate planning to create an advance directive for you within your state’s laws.

To enact a revocable living trust, you will need a written agreement or declaration of trust, which sets out your plan for distributing your assets. You’ll want to consider who will be the beneficiary of your assets and who will manage them. Many people opt to leave their assets to their children while appointing a neutral party, like a friend, as the trustee.

Then you must legally transfer most trust assets to the trustee like deeds, stock transfers, new bank accounts, and other legal documents. By hiring an estate planning attorney, you can better understand the specific assets that should be (or should not be) transferred to the trustee.

No matter your age or life stage, it is never too early to make your wishes known and plan for your family’s future. Working with an experienced estate planning attorney can help you be better informed about the consequences of these critical decisions and help you form and articulate your plans for many of these eventualities.

If you have any questions or would like to discuss the benefits of an estate plan, please call or email us today. We are always happy to offer you a no cost consultation.

Email: Info@BlakeHarrisLaw.com

Phone: 833-ASK-BLAKE