When you hear the term “will” used in an estate planning context, you are probably going to think about the document that is used to state your final wishes regarding asset transfers. A last will or last will and testament can be used as an asset transfer vehicle, but this is not the only type of will that can be utilized.
There is another type of will that everyone should have that is called a living will. This type of will has nothing to do with asset transfers. A living will is an advance directive for health care. You can use a living will to record your life-support preferences.
Physicians can sometimes keep people alive indefinitely through the utilization of artificial measures like feeding tubes, artificial hydration, and mechanical respiration. This can be true even if there is no hope of recovery. With a living will, you can state your life-support preferences.
When a living will is in place, medical professionals would be compelled to follow your instructions in the event of your incapacitation.
Living Trusts
A living trust is an asset transfer vehicle. You could use a living trust as an alternative to a last will as the centerpiece of your estate plan when it comes to the financial element.
If you use a last will to state your final wishes, it would be admitted to probate after you die. This is a legal process that provides interested parties with certain protections, but it comes with some drawbacks.
An estate can pass through probate in around nine months to a year in most areas. This is a considerable amount of time to wait for an inheritance, and inheritances cannot be distributed while the process is underway.
Probate expenses are another negative, and the process is a public proceeding. Anyone who wants to find out how you decided to distribute your assets can obtain probate records, and this can cause difficulties if there are disgruntled parties who feel as though they they were not treated fairly.
When assets have been conveyed into a living trust, the trustee that is named in the document can distribute assets to the beneficiaries outside of probate, so these drawbacks are avoided.
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