The estate planning process will require you to create a number of different tools, including a living trust and a last will and testament. Both of these documents are essential if you want to ensure that your inheritance choices will be legally honored. Yet because a lot of people do not have a lot of familiarity with a living trust, a lot of them are surprised to find out that they need both of these tools. Here are several questions about living trusts and wills, and why you will need to include both of them in your estate plan.
Question 1. What does a will do?
I will allows you to leave inheritances. As long as you create the will in such a way that it complies with the legal requirements of your state, you can choose whatever inheritances you wish. You have no obligation to leave, for example, equal inheritances to your children, or leave your children any inheritances at all.
A will also allows you other choices. For example, through your will you can choose who you want to serve as the executor of your estate. The executor, also called a personal representative, will have the responsibility of managing your property through the probate process that follows. If you have minor children, you can also use your will to name a guardian who will care for those children should you die before they reach adulthood.
Question 2. What does a living trust do?
A living trust, like a will, gives you the ability to make inheritance choices. However, the living trust doesn’t do this through the probate process. Instead, it allows you to avoid probate and pass inheritances directly to your chosen inheritors.
When you create a living trust you create a legal entity that exists separately from you. That entity can own property and can survive you after you die. So, when you transfer your individually owned property to the trust as the new owner, the trust will continue to exist even after you’re gone. Because you created the trust, you also get to choose how the trust will distribute the property you have transferred to it. This way, you can transfer your property to your heirs outside probate by using a living trust.
Question 3. If I have a living trust, why do I need a will?
There are two main reasons. First, a living trust does not allow you the executor and guardianship appointment options that will allows you. Second, if you have a living trust, your will also serves as a safety net. If you fail to properly transfer some of your property into the trust’s name, you can use your will as the final property-transferring device.