Planning for your asset management while keeping in mind your own demise is Stressful but at the same time crucial for your loved ones.
If you are reading this article, you really care for your loved ones and you are probably on the right track.
What is a Living Trust?
Just Like a Last Will and Testament, Living Trusts are documents created by a person known as a “Grantor/Initial Trustee” who puts property into a Trust and enjoys the benefits of it during their lifetime. Upon the death of the person, the property is managed by another person appointed by the Grantor called a “Successor Trustee”. The people who inherit the Trust property upon the death of the Grantor are the “Beneficiaries”.
In Living Trust, Grantor has full control over the property and can enjoy the property till he dies by naming himself/herself as the Initial Trustee. After the death of the Grantor, the administration of Trust Property is dealt by the Successor Trustee; in this way, the Successor Trustee works similar to that of an Executor of a Will.
Read this to know more about creating a Living Trust online.
What is a Living Will?
Living Will is a legal document that provides instructions and directions on the healthcare treatment you would like to receive when you are debilitated to lose the capacity to convey your wishes & consent to any ailment or disability. Living Will specifies to your doctors, caregivers, family, friends, and loved ones to implement them in adherence to your desires.
The purpose of a Living Will is simple: it provides a shield against every unanticipated medical crisis. We do Estate Planning for the benefit of our family, friends, and loved ones and to protect our property, assets, and estate. But Living Will is prepared for the benefit and protection of ourselves.
Read this article to know more about a Living Will.
Difference Between a Living Trust and a Living Will
The following are the differences between the two documents.
1. Purpose
The purpose of creating a Living Trust is to protect your loved ones after you die by creating a Trust while Living Will is to provide healthcare directions you want to receive when you cannot convey your wishes.
2. Beneficiary
Beneficiaries of a Living Trust are the person who will receive the distribution after the death of the Grantor. There is no beneficiary in the case of a Living Will as it is for the benefit of the person who creates it (Testator).
3. Date of Effect
Living Will comes into effect when the testator becomes incapacitated.
A living trust takes effect immediately, once created and signed by the Grantor, and can be used for the benefit of the grantor while he/she is alive. After the death of the Grantor, benefit will be availed by the beneficiaries specified in the trust.
4. Date of revocation
Living Will is revoked upon the death of the Testator while Living Trusts do not end upon the death of the Grantor; rather they can be used for the distribution of the assets among the beneficiaries as per the grantor’s wishes after he/she dies.
5. Representative
To appoint a Representative, a Living Will can subsume another legal document i.e. Medical/Healthcare Power of Attorney. Living Trust does not need any separate document for that purpose. A trustee is appointed by the Living Trust, itself.
Living Will or Living Trust - Which is Better?
Both living trust and living Will serve different purposes and benefits. It is not correct to say that Living Will is better than Trust and vice versa.
Whether you need a living trust or a living Will depends upon your needs and requirements. You should first understand your financial and personal situation to decide which one is better for you.
If you are confused, you can connect with an Estate Planning Attorney for guidance and select the best option for you.
Can you have both a Living Will and a Living trust?
Yes. You can have both documents as part of your Estate Planning to make it comprehensive as both of them serves different purposes and have their own benefits. Trust can help you to avoid probate and estate taxes and Wills, on the other hand, Living Wills include the provisions for instructions and directions on the healthcare treatment you would like to receive when you are debilitated to lose the capacity to convey your wishes & consent to any ailment or disability.
