When it comes to securing your legacy and ensuring your assets are distributed according to your wishes, will-based estate planning stands as a time-tested and reliable option. A last will is a legal document that allows you to outline how you want your property and possessions distributed after your passing. The key phrase here is “after your passing”. By clearly stating your intentions in your will, you provide your loved ones with the guidance they need during a difficult time. However, once the testator (the person who wrote the will) dies, their wishes cannot be enforced automatically by their personal representative who was appointed in the will. The will must be probated in order to enforce the wishes of the testator. Probate is the legal process through which a deceased person’s assets and estate are administered and distributed according to their will, potentially causing delays and expenses. The probate process, although not the worst thing in the world, can be lengthy and public.
While will-based estate planning is a step in the right direction, it might not offer several perks that a living trust has to offer.
In the realm of comprehensive estate planning, a living trust emerges as a powerful tool that offers flexibility, security, efficiency, and savings. Unlike a traditional will, a living trust comes into play while you are still alive. There is a reason it’s called ‘living’ trust after all. A living trust allows you to plan for your disability. By appointing yourself as the trustee initially and naming a successor trustee, you can ensure that your financial affairs are handled according to your preferences if you become unable to manage them yourself.
One of the key benefits of a living trust-based estate plan is the ability to avoid probate, which translates into less stress after death, faster distribution of assets, more privacy, and reduced administrative costs. I often tell my clients, that creating a trust is like creating their own bucket into which they would transfer their assets. All the assets that make it into that bucket, can bypass the probate process.
Once a will is probated, the will becomes a public document. However, the matters of a trust are privately handled by the trustee appointed by the trust creator. Privacy is especially appealing to those who wish to keep their financial and family affairs confidential.
Living trust-based estate planning is versatile and can cater to complex estates, blended families, and individuals seeking to minimize estate taxes. While it typically requires more upfront effort and expense to set up, many find the benefits it offers in terms of control, privacy, and efficiency to be well worth the investment.
In conclusion, whether you opt for will-based estate planning or living trust-based estate planning, having any form of estate plan in place is a crucial step towards safeguarding your loved ones and preserving your legacy.