Did you know that about 68% of Americans don’t have a will?
Having a will or trust is not only for wealthy individuals. Creating a document like this can give a person peace of mind. If you’re included in that number and have decided to create a will, you came to the right place.
Do I need a will or a living trust? Read on to learn the answer.
Wills Vs. Living Trust: What’s the Difference?
When it comes to financial planning, many people are not sure if they should prepare a living trust or a will. Although they both bring peace of mind, there are some key differences between both of them.
For instance, a will is a legally binding document that outlines a deceased person’s last wishes, such as who gets which asset, guardianship of minors, and other gifts to friends or family. Wills are not active until the death of the person.
Unlike a will, a trust is a legal document that comes into effect while the person is still alive. With a living trust, the person designates the distribution of assets while they’re still alive.
After a person dies, the will has to go through a probate process with the courts to ensure its validity. For example, if a family member contests the will, it can go through a lengthy court process.
Because trusts become active while the person is still alive, they don’t have to go through a probate process. Trusts can not be contested after the grantor dies.
Talking to a lawyer will help you while preparing your wills and trusts.
What’s Included in a Will?
Most people are familiar with wills because it’s part of planning the funeral and memorial process after a loved one’s death.
Typically, a will expresses the last wishes of a deceased person and is quite specific, depending on its assets. Many people not only include how they want their assets distributed but also leave instructions for funeral arrangements.
Most wills include a list of debts, assets, property, heirlooms, vehicles, and guardianship of children.
What Is a Living Trust?
People create a living trust while they’re still alive to handle and distribute their assets. After you create a living trust, you give a third party the authority to manage your and your beneficiaries’ assets.
Many people create a living trust as a way to protect their beneficiaries from going through the probate process in the future. These are known as testamentary trusts.
Unlike testamentary trusts, living trusts are revocable and used to transfer assets between beneficiaries. When you create a living trust, you have the option of adjusting the distribution of assets during your lifetime.
Do I Need a Will or a Living Trust?
Do I need a will or a living trust? Now that you have more information, you can decide which one is right for you.
While a will is a document that expresses the person’s last wishes, a living trust can be adjusted throughout its lifetime.
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