Many people thinking of planning for the future have no idea where to begin. There are several different options, but the two most commonly-used estate planning tools are Wills and Living Trusts. While most people have heard of Wills or Trusts, few know what each one actually offers as an estate planning tool. While every individual is unique with different wants and needs, both Wills and Living Trusts are typically aimed at the same goals which are to (1) protect your estate; (2) manage assets; and (3) provide for your loved ones after death.
A Will is one of the most basic estate planning tools used. A Will offers the essential things needed to convey the last wishes of the deceased. Typically, in a Will the Testator (person who made the Will) designates who inherits what property from his or her estate. The Will cannot choose how or when the property should be transferred but merely states the Testator's wishes for the Court to execute during the probate process. Wills are probably the most commonly used estate planning tool for the simple reason that they cover the essentials.
Living Trusts on the other hand offer much more control and privacy as an estate planning tool. A Trust is a much more complicated document that directs a trustee to watch over the estate and execute the wishes of the deceased person. Typically, the Trustee will invest the trust assets so the Trust can actually generate an income and can exist long after the original grantor's death. Unlike Wills, Trusts are not required to be filed with the Court and avoid the probate process altogether. This saves time and money for the deceased's family, while providing some privacy for the grantor.
In the end deciding which estate planning option is best for you depends on a variety of circumstances. Living Trusts provide for more privacy and control but are more complicated to create and fund. Wills can be simple and easier to create but become public knowledge through the probate process. Either way, both options would be a better choice than doing nothing.
by Cole Bailey J.D.