Should You Have a Living Trust or a Will?
When people are making end of life plans, a common question that they ask is whether they should have a living trust or a will. Both documents account for how their estate will be settled and each gives clear instructions as to a person’s wishes for their heirs’ inheritances. However, they each have advantages and disadvantages that a person should consider before executing one.
First, to choose the best option, you should have a clear understanding of what each document is. A will is a document that only goes into effect after you have died. It designates your wishes for the property after you have passed away and therefore no longer own it. A trust, on the other hand, goes into effect right away. A trust is a legal arrangement where a trustee holds legal title to certain property designated in the trust. People who create living trusts for estate planning purpose generally appoint themselves as the trustee and then specify who will take over as trustee upon their death.
Wills versus trusts
Some people elect to create a will because it is considered simpler and does not require you to transfer legal ownership while you are alive. There is no need to transfer any property to another person or entity for a will to be considered valid. However, wills are governed by probate, which is a legal process that settles an estate after a person dies. This process can be both costly and time-consuming and distributions from the estate can take months or even years.
A living trust is the preference of some people because it is a cost saver in that it avoids probate, which can cost up to 10 percent of the value of the estate. Additionally, a living trust immediately transfers ownership of property at the time of death. Unlike with a will, there is no need to have a personal representative of the estate appointed to settle the estate. The drawbacks on a living trust, though, are that it requires some work at the outset in terms of setting up the trust and it must be done properly for it to be valid. When someone creates a trust that does not know what he or she is doing, it can be considered invalid.
Both wills and living trusts are important tools for end-of-life estate planning. Consult an experienced Florida estate planning lawyer with the Charles Law Offices for the advice and guidance you need.