Living Trusts Vs. Wills: Choosing the Right Estate Planning Tool

There many types of estate planning tools and each one offers benefits and drawbacks. Some tools work better to accomplish certain goals than others. In addition, some individuals or families may not need to utilize certain options, while others will need a variety of more complex choices.

Revocable living trusts and wills are similar because they allow you to name beneficiaries for your property. These are both perhaps some of the most widely used estate planning tools, but they accomplish diverse goals.

Many people use living trusts to avoid having to probate their will, but there are certain things that a trust cannot accomplish that a will must do. As a result, many people use these tools in conjunction as part of their comprehensive estate plan.

What Is a Living Trust?

A living trust, also known as an “Inter Vivos” or “revocable” trust is a legal document that creates an entity in which you place your assets. Your assets technically belong to the trust once you transfer them, but you still have full control in a living trust. The property is used for your benefit during your lifetime and then transferred to your designated beneficiaries at your death. Once you pass, a new trustee that you choose will take over and disperse your benefits according to your specific instructions.

A living trust is remarkably similar to a will because it fulfills many of the same functions, specifically dispersing your assets to the beneficiaries that you designate. However, a will must go through the probate process, which can be expensive and time-consuming. Creating a living trust allows you to avoid the probate process for most assets.

The Differences Between a Living Trust and a Will

Living trusts have a few distinct advantages over a will. While avoiding probate is usually the most helpful and recognizable benefit, there are some other advantages as well.

  • Leaving property to young children. In most circumstances, children under the age of 18 cannot legally own property. By putting an asset in a trust, someone else can manage the property on behalf of the child until he or she turns 18. As a result, leaving your property in a living trust to be dispersed upon your death allows even minor children to legally inherit your assets.
  • Increase privacy after death. A will is a public document, but a living trust is not. By using a living trust to disperse your assets instead of a will, you keep your affairs much more private. This additional layer of privacy can be extremely important for some families.
  • Increase protection from estate challenges. Generally, living trusts are harder to dispute compared to a will. Trusts are also more difficult to establish, so they do require some planning. This special planning is actually part of what makes living trusts so difficult to challenge.
  • Creating a conservatorship. In a living trust, you can create a conservatorship so that another person will have authority over the trust property if you become incapacitated or otherwise unable to manage your affairs. You can accomplish the same goal through other estate planning tools, but it is sometimes handy to have it included all in one document.

You can also do things with wills that you cannot accomplish in a living trust. For example, you cannot name guardians for the care of minor children in a living trust. You also may not be able to leave specific instructions on how you like to pay your taxes or outstanding debts.

Having the right estate planning tools for your unique situation is important. An experienced estate planning attorney can help you develop this comprehensive system in a way that works best for you.