Estate Planning

This estate planning website was created in 2007 to clearly define a living trust vs will in easy-to-understand terms for both young families and those without dependent children.

You will learn similarities and differences between different estate planning documents and discover ways to optimize your estate plan's effectiveness.

As you read the site, prepare a list of questions for a future meeting with an estate planner. If you are the successor trustee of an existing trust we hope this site provides answers to potential questions but do not hesitate to contact a local attorney for assistance.

Pre-estate planning kit for living trusts and wills

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Living Trusts vs Wills

Before discussing their differences, both wills and living trusts perform two very similar functions:

Both documents can appoint people to manage your estate after you pass. In a will, this person is called the PERSONAL REPRESENTATIVE or EXECUTOR. In a trust, this person is known as the SUCCESSOR TRUSTEE.

Both documents name beneficiaries of your estate. However, here is where the differences begin.

Last will & testaments state "where" assets will go. Wills provide no control how assets are used.

Living trusts can state "where", "when" and "how" assets will be distributed. They can hold assets long after the trust's creator passes.

Living trusts have this ability because they are legal entities. A living trust can hold real estate, vehicles, bank accounts and non-qualified (after tax) investments. A life insurance policy or retirement account might list a living trust as the beneficiary.

A living trust does not replace a will. It is used in conjunction with a special will called a "pour over will", which can direct the distribution of assets left outside the trust and lacking beneficiary designations. The pour over will often lists the living trust as the beneficiary.

Living Trusts & Wills

	Last Will	Living Trust
Date document takes effect	Upon the deceased's passing	Date living trust is signed
Appoint agent(s) to act during an incapacitation	No	Yes
Appoint guardians for dependent children	Yes	No
Control when beneficiaries receive assets	No - unless a testamentary trust is created	Yes
Allow use of assets (such as a home) by someone after deceased has passed before ultimately being distributed to other beneficiaries	No - unless a testamentary trust is created	Yes
Provisions for pets	No - unless a testamentary trust is created	Yes
Help assets avoid probate	No	Yes
Reduce estate taxes	No	Potentially
Privacy of estate	No	Yes - depending on state deceased lived in
Ease of contesting	Easy	Difficult
Typical cost to create	~$50 - $1,500	~$300 - $5,000
Typical cost to maintain (excluding amendments)	$0	$0, aside from vehicle and deed titling fees

Effective date: A will takes effect after you pass. A living trust takes effect when you sign the document and transfer assets into it.
Incapacitations: Wills are useful once you pass. Living trusts can sometimes make management of an estate during an incapacitation easier than power of attorneys alone.
Privacy: Wills are made public during the probate process. In some states living trusts are private documents and not required to be recorded.
Probate: Probate is court process, not a tax. The process validates a will, ensures instructions are followed and repays creditors during the transition of an estate. Probate's cost and length differ in each state. Assets with listed beneficiaries (life insurance, IRA's, beneficiary deeds, etc) and assets in a living trust avoid probate.
Guardians: Wills name guardians for children. Living trusts do not name guardians.
Holding assets: Living trusts can hold assets after a person has passed. Common reasons for holding assets include: managing assets for young beneficiaries, protecting special needs beneficiaries receiving disability income, maintaining assets for a spouse in a blended famly, and providing for pets.
Contesting: If someone contests the estate, living trusts are sometimes better equipped to handle the contest.
Taxes: Living trusts can minimize ESTATE TAXES for married couples by doubling estate tax exemptions. A will by itself can not double exemptions. There is a federal estate tax and some states have their own estate tax. Estates transferring less than $5M in 2011 and 2012 are not subject to the federal estate tax. Amounts over $5M are taxed. In many states, if you have less than one million dollars of net assets (including life insurance payouts) there is little worry of estate taxes.

For You?

There are many factors which could shape the direction you take, including but not limited to:

What state you live in (probate and estate taxes)
The value of your estate
The type of assets you own
The ages and needs of your beneficiaries

The likelihood of your estate being contested
Your trust in potential nominees to manage your estate without court oversight
How diligent you will remain regarding placing assets in your trust

The Estate Director

Even if you have a will or living trust in place, how prepared is your estate for someone to step in and act quickly? Read powerful testimonials for these useful planning tools which can save time and money for a spouse, your executors, trustees, agents acting under powers of attorney and guardians for your children.

"I was an accountant and business manager for over 20 years. I have personally lost two close friends who were attorneys and clients of mine. As I began to work in settling their estates, I was amazed at the amount of information I didn't know and needed. And I hated every call to loved ones to gather that information... continue." - Jerilyn, Retired Accountant


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Important: Please consult with a legal professional before undertaking any actions. The information in this web site is provided with the understanding that the publisher is not engaged in rendering legal, tax or investment advice. While every attempt has been made to provide current and accurate information, neither the author nor the publisher can be held accountable for any errors or omissions. You agree not to hold any employee or person associated with www.livingtrustvswill.com liable for action you take from the information on www.livingtrustvswill.com.

Living Trust vs. Will

Estate Planning

Living Trusts vs Wills

Living Trusts & Wills

For You?

The Estate Director