Knowing the difference between a living trust and a will can help you draft an estate plan that fits your needs. For the best results, you’ll need an attorney who understands both wills and trusts to help set up both documents properly so they work together seamlessly to support your needs now and in the future.
A will is a legal instrument that does not transfer ownership of your assets. Rather, it simply states how you want them distributed after death. A living trust is an estate planning instrument that allows you to transfer ownership of your assets to a trustee (a person or organization). Deciding between a living trust vs. a will is made easier with the help of an estate planning attorney.
What Is a Will?
A will is a legal document that allows you to specify how your assets will be distributed to your loved ones after you pass away. It’s also known as a last will.
If you have minor children and want them taken care of by someone, you must name this person as a guardian. In addition, naming beneficiaries in a will ensures that those people benefit from stated policies when you pass away.
With a will, your loved ones won’t have to go through the trouble of figuring out how much money was left behind by combing through bank statements after death occurs. A will can help ensure your loved ones fulfill your last wishes after death. This can be especially important if you want to eliminate the drama that ensues when there are no clear instructions on handling property distribution.
What Is a Living Trust?
A living trust is an estate planning instrument that helps you avoid probate court by allowing you to transfer assets directly into the care of another person or institution. Unlike a will, a living trust sets the terms for your assets to be handled or distributed both when you are alive and after you die.
It gives you more control over who inherits what property when compared with simply leaving everything in a will alone. You can specify which items go where and when they get distributed so that the courts don’t have to get involved in your affairs after your demise.
What Works Better, a Living Trust or a Will?
A will only applies to the property you own at the time of death and does not allow for any planning for future assets. A living trust allows you to name someone (your trustee) to manage your assets after your death.
You may choose both a will and a trust if you have minor children who need guardianship or if there are other special circumstances involved in your estate plan. Otherwise, using a living trust will suffice for most people’s needs.
Benefits of a Will
Flexibility: Wills can be changed or revoked anytime during your lifetime.
Simplicity: Wills are generally easier and less expensive to create than living trusts.
Clarity: A will can provide clear instructions for distributing your assets, reducing the likelihood of disputes among your heirs.
Benefits of a Living Trust
Incapacity planning: A living trust can provide for managing your affairs in case you become incapacitated without requiring a court-appointed guardian or conservator.
Flexibility: You can amend or revoke a living trust during your lifetime, allowing you to make necessary changes.
Avoiding probate: Assets in a living trust bypass the probate process, which can save time and money and maintain privacy.
Working With Trusts and Wills
A combination of a living trust and a will can be an effective estate planning strategy. A trust can handle the bulk of your assets and provide for their seamless distribution, while a will can appoint guardians for minor children and take care of any assets not included in the trust.
Benefits of Working With an Estate Planning Attorney
Working with an estate planning attorney can be beneficial for many reasons. He or she will know what documents to create and which ones you need based on your unique situation, so there’s no need to worry about making mistakes or missing something important. Also, working with an attorney means all your documents will be created correctly from start to finish. This is especially true if those wishes were meant specifically for loved ones, who may not understand how things work without guidance from someone who does.
What Are Some Common Misconceptions About Trusts and Wills?
Many people believe they don’t need to make arrangements for their estates until they’re older than 50- but this isn’t true. Even if you’re young and healthy now but have children who might need help taking care of themselves later in life, it would be wise to establish an estate plan early.
Creating a will or a living trust could save your loved ones from having to go through probate court proceedings later on down the road. It will guarantee they have the resources to continue with their life when things get difficult financially or emotionally after you’re gone.
What Is Probate?
Probate is a legal process involving the court overseeing asset distribution to beneficiaries. You can avoid probate if you have a will or trust, but it’s still essential to understand how probate works and why it’s necessary.
Probate ensures that your loved ones follow your wishes after your death, including who gets what property and when they receive it.
How to Avoid Probate in Illinois
Joint ownership with the right of survivorship is one of the best ways to avoid probate in Illinois. If you jointly own real estate with another person with a right of survivorship, the surviving co-owner will automatically own 100% of the real estate when the other owner dies. The deed creates the right of survivorship.
You can also avoid probate in Illinois by establishing a living trust, which can help you avoid probate for almost any asset you own, including real estate, bank accounts, and vehicles.
Another way to avoid probate in Illinois is to set up a revocable living trust. With a revocable living trust, assets will be transferred during your lifetime so that when you pass away, the trust will continue, and assets will not need to be probated.
An estate plan that includes establishing a revocable living trust is one of the best ways to avoid going through probate court in Illinois. When establishing a revocable living trust, all estate assets will go to the trust beneficiaries.
Choosing between a living trust and a will depends on your circumstances, goals, and preferences. It is important to consult with an estate planning attorney who can help you determine the best approach for your unique situation.
By understanding when to use a trust and when to use a will, you can create an estate plan that provides peace of mind and ensures the proper management and distribution of your assets.
