Living Trust vs. Will: Understanding the Key Differences
Most people already have a basic understanding of Wills and Living Trusts. But many are still unclear when it comes to the difference between the two.
Both Wills and Living Trusts are indispensable estate planning tools, and are often used together as part of a comprehensive estate plan. What follows below are some of the key differences between Wills and Trusts that you should be aware of:
- Wills and Trusts Differ With Respect to When They Are Effective – A Will becomes effective only after you die. A Trust, on the other hand, becomes effective as soon as it is created, and remains effective while you are alive and well, when you become incapacitated, and after you die.
- Wills and Trusts Have Somewhat Different Purposes – The main purpose of a Will is to specify who inherits your assets when you die and to identify a Personal Representative who will carry out your wishes, as stated in your Will. In contrast, the purpose of a Trust is to hold legal title to your assets and direct the management and/or distribution of those assets.
- Wills and Trusts Affect Different Types of Assets – A Will affects any assets you own in your individual name at the time of your death. It does not affect assets that you own jointly, hold in a Trust, or that has a designated beneficiary (provided that the beneficiary is someone other than your estate). A Trust, on the other hand, affects only assets that have been transferred to your Trust, i.e. titled in the name of your Trust.
- Wills and Trusts Differ With Respect to Probate – A Will goes through probate. But a Trust bypasses probate, avoiding the cost and delays associated with the probate process. Also, a Trust remains private, while a Will is a matter of public record.
- Wills and Trusts Differ in Terms of Cost – Even though more expensive initially, a Trust can ultimately be less expensive because it avoids the probate process, provided that it is properly drafted and funded with your assets.
Is a Will or a Trust Better For You?
Whether a Will or Trust is better for you and your family, depends on your individual circumstances. Each has its advantages and disadvantages.
With a Will, you can name guardians for your minor children and specify funeral and burial arrangements, but not with a Trust. On the other hand, a Trust allows you to plan for periods of incapacity and to minimize estate taxes, neither of which can be achieved with a Will.
Ultimately, however, it is up to you to decide which of these two estate planning vehicles is best for you and your family. What’s more, your decision should take into consideration the various differences between a Will and a Living Trust, and how the two may be used in conjunction as part of a comprehensive estate plan.
Contact an Experienced Virginia Estate Planning Attorney
For more information, or for help deciding if a Will or Trust should serve as your foundational estate planning document, call our law office to speak with an experienced Virginia estate planning attorney. You can contact Speedwell Law at (703) 553-2577 or use the contact form on our website to arrange a consultation.
The information on this site is for general informational purposes only. The information presented in this site is not legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this site.