When looking at legal documents regarding distribution of property and your assets after death, you will find a last will and testament and a living trust. These two documents are not the same, although they both deal with the distribution of your property after your death. Deciding which one is best for your estate can be tricky, and it’s important that you understand the differences between the two.
A last will and testament, often just referred to as a will, is a legally binding document that outlines your last wishes regarding how your property and all assets are to be divided up and distributed. It lists all of your beneficiaries and will name an executor for your estate. This executor will be responsible for seeing that everything outlined in the will is taken care of according to your wishes. Your will may also name a legal guardian for any of your children under the age of 18, and specify where the money for any outstanding debts, funeral expenses, and taxes is to come from. It doesn’t matter how much property and assets you have—even someone who believes they have very little should prepare a will.
It is very important to note that a will is different from a living will. A living will is a document that outlines your medical wishes. Living wills tell loved ones and health care professionals if you wish to be artificially resuscitated, kept alive on life support, and what other treatments you consent to or refuse if you are incapacitated and unable to state your wishes directly.
On the other hand, setting up a living trust is often done so that beneficiaries will not have to deal with probate courts upon your death. Living trusts mainly have to do with property. They create a trust that is controlled by the trustee (often the grantor (you) until your death). The trustee has the power to directly transfer ownership of any property listed in the trust to any beneficiary without going through the court system. After the transfer of all property is completed, the living trust is dissolved. Living trusts generally don’t outline guardianship of children or post-death wishes, so it’s important that you also have a legally binding will on file.
To ensure that all your decisions and wishes are followed upon your death, it is prudent to consult with an estate attorney.