If you’re reading this right now, you probably have accumulated some assets, found your life partner, and even have a few children.
You know you need a plan, and you may suspect a trust should be part of that plan. But the unknowns around a trust make you feel anxious. The first thing you should know is that creating a living trust may be just the right tool for securing your legacy for your family.
If you’re reading this blog, I know you want to make sure your family has a safe and secure financial future. And I’m here to help you understand all of it! When you understand the advantages of a living trust over a traditional Will, the decisions that you make on how to secure your legacy will be well informed.
Understanding Living Trusts: How Does it Work?
So what exactly is a living trust, and how does it work? Picture this: a living trust is like a “special container” you create when you’re alive. It holds all of your valuable things; like your house, money, and investments — and you’re the one in charge of it.
This means that you can put things in and take things out whenever you want — like your own personal bank account. A living trust becomes effective as soon as it’s made. While you’re alive and well, you’re the one in control of managing everything inside this “special container.” You still get to use your assets as you normally would. So nothing really changes for you since you’re still in control.
When you pass away is when the living trust works its magic. At the time of your passing, that “special container” (your living trust) has a plan built in. There are instructions about who will receive your assets and belongings, and more importantly, when and how they will receive them.
Since these instructions are in place, your loved ones can begin to benefit more quickly. Most people like the fact that it’s a smooth and private process — and most importantly that it avoids the need to go to probate (aka a lengthy court procedure.) This means your loved ones will go through less hassle if you have a living trust as opposed to a Will.
What Makes a Will Different From a Living Trust?
What makes a Will different from a living trust? In simple terms, the main difference between a Will and a living trust is when they take effect, and how your assets are handled when you pass away. Here are some other differences at a glance so you can compare.
- Goes into effect after your death.
- A legal document that states your wishes on how you want to distribute your assets (like your house, money, and belongings after your death.)
- Requires the probate process, where the distribution process goes to court to make sure everything is done according to your instructions.
- You appoint guardians for your minor children.
- If you need to make changes to your Will, you can at any point in your life.
- A Will doesn’t give any management or protection of assets during your lifetime.
- Is effective as soon as it’s created, and it’s funded with your assets.
- A legal entity that manages and holds your assets during your lifetime, but then transfers them to your listed beneficiaries after your death.
- Assets in trust avoid probate, meaning your beneficiaries will have your assets distributed to them more quickly and privately.
- You are in charge of your assets at first, and can choose someone else to take over if you’re unable to manage them or when you pass away.
- It includes the plans for managing and giving your belongings if you become unable to make decisions.
- There can be some limited asset protection for your beneficiaries.
- As long as you’re mentally capable, you can make changes to your trust during your lifetime.
- Compared to a Will, a living trust is more expensive and complicated to set up.
As you can see, there are many key points to what makes a Will different from a living trust. And it all depends on what is right for you and your family at this point in your life. Let me give you two examples of real life scenarios (which are fictional and only used for illustrating advantages.)
Matt, a 55-year-old — chose to make a Will for its simplicity and lower set up costs, because his estate is pretty straightforward.
In contrast, Lisa, a 41-year-old professional, opted for a living trust to make sure her assets are protected and her family avoids the cost and delays of probate.
Seeking Expert Advice for Your Estate Plan
Let’s face it, estate planning isn’t the easiest thing to do on your own. And there’s a lot to consider when it comes to what works best for you. That’s why I’m here — to take all of the guesswork out of what choice you should make regarding your family’s legacy.
For 27 years, I have aimed to provide all of my clients with the most valuable insights, as well as expert advice. I’ll help you make a decision that aligns with your specific goals and objectives. Whether you’re wanting to create a living trust or a Will, I’m here to guide you through the entire process.
If you’re feeling overwhelmed and anxious right about now, I understand — that’s normal. But I can guarantee you’ll feel a sense of relief when you schedule a call with me at Schroeder Larsen Law. Once I get to know you and your circumstances, we’ll work together to create your life and estate plan.
Click the link now to schedule your informative consultation, and let’s take some stress off your shoulders!