There’s a misconception that likes to ripple through society, a myth that wouldn’t have been entertained many viewers on the television show Mythbusters. This common misconception is that estate planning is only necessary for the rich and wealthy. That statement couldn’t further from the truth.
Both wills and living revocable trusts can provide specific benefits to anybody interested in estate planning. If you have children, or any amount of assets you wish protecting, down to family heirlooms or a watch collection, estate planning is for you.
The defining differentiator between a will and a trust is when they go into effect. A will goes into effect upon your death. A living revocable trust becomes active the minute it is legally vetted.
Another distinction separating a will and a trust is that a will often must pass through probate, the lengthy and costly legal process to vet the wishes of the deceased and assign the property accordingly.
If fully funded, a trust bypasses probate and fully private. Because a court must file a will, it becomes public record. For separate purposes, it is widely encouraged for those with large estates to create a will and living revocable trust. Individuals with small estates may be able to bypass probate with only a will, but states often have a low threshold for “simplified” probate.
Other differences between a will and living revocable trust
Unlike a trust, a will does not provide protection for mental incapacitation because they only become active upon death. A living will allows you to provide instructions about which medical procedures you wish and don’t wish to have.
The benfit of a living revocable trust provides the ability to assign a successor trustee and medical proxy to handle such affairs upon mental incapacitation. Other differences include the following.
Will
- Can be updated as significant life changes occur (birth, divorce, marriage, death)
- Name a guardian for minor children (without an assigned guardian, this decision is up to the court)
- Does not have to be funded
- Assign smaller keepsakes and collections
- Outline funeral wishes
Trust
- Assign beneficiaries for more substantial assets like a home, vacation home, a financial inheritance, land and life insurance policies
- Puts your family (the successor trustee) in control upon death or incapacitation
- Revocable living trusts can be adapted at any time the grantor (the creator for the trust) as long as they are mentally capable
Estate planning offers needed protection for your family and the assets you worked hard to acquire. An experienced estate planning attorney can assist you in creating a plan that works best to fit your specific needs.