Wills let you designate a guardian for your minor children and designate who will get your assets when you pass. Wills can be a great choice for young families who have not amassed significant assets yet. The drawback to having a will as the central organizing document of an estate plan is that a will must pass through probate. This means that a Court must supervise the distribution of your assets after you pass, which can be time consuming, costly, and is a public process.
Living Trusts are legal entities that hold your property while you are alive and contain instructions for distributing that property after you pass. Living Trusts do not have to go through the time consuming and expensive process of probate. With a Living Trust, the trustee simply transfers the trust assets according to your instructions, without the supervision of the court in a probate proceeding. Living Trusts require slightly more work to set up. However, once the initial set up is taken care of, a Living Trust is easy to maintain.
Living Trusts are a good option for families who have accumulated assets – such as a home – that they want to protect. They also allow families to set up a timeline for when children receive their inheritance – for example, a thoughtful trust will give children a chance to “practice” managing a portion of their inheritance with the security of knowing that a levelheaded trustee is keeping the remainder of the inheritance secure.
Want more information on Living Trusts? Click here to read my blog post on the importance of including a Children's Trust in your estate plan if you have minor children, or if you are leaving money to someone else's children, and here for a blog post discussing why Living Trusts aren't just for the very rich.
Ready to Get Started on Your Estate Plan?