No one likes to think about passing away, but planning ahead and setting affairs in order can provide plenty of comfort, knowing that your assets will be handled the way you want when you’re gone. Generally, in order to organize who receives your belongings after you die, there needs to be some form of a legal document. Two popular ones are a will and a living trust.
Living Trust vs Will
A living trust is a private legal document that places all of your assets into a trust while you’re still alive. Essentially, you establish a trust and transfer all of your assets to it while you’re alive. In doing so, the trust now owns your assets. However, you will be the initial trustee, so you still remain in complete control of both the trust and its assets. If you are in any way unable to manage your assets but haven’t died (e.g., you become comatose), this document would also come into effect. A living trust is funded by your assets (e.g., property, bank accounts, stocks, and bond accounts as well as certificates).
A will is a public document that also dictates how assets will be dispersed after death. An executor, a person you designate, carries out your will and oversees the asset distribution process once you pass away.
Who Should Get a Living Trust?
These documents are designed for a wide range of people. Anyone who needs or wants privacy while going through legal courts would be an ideal candidate for a living trust. It could also be beneficial for anyone who owns property outside of the state that they live in.
Cost and Procedure
Living trusts can cost anywhere from $1,000 to $2,000. The majority of this cost comes from the attorney that writes the document. Before finding an attorney to draft the living trust, you must first have a list of your assets handy, including paperwork that verifies they are indeed your assets. You’ll also need to have a list of your beneficiaries, or individuals that receive your assets.
Especially important for a living will is to have a successor trustee. You are the initial trustee of your living trust, so you need a successor in order to have your debts paid off as well as your assets distributed after you pass away.
Setting up a living trust online is also an option. These are typically much cheaper as they usually do not rely on an attorney to write the individual document. They can range from $60 to $250, depending on the company.
Avoiding probate saves time and money – Probate is the legal process that validates your will after you pass away. It can take anywhere from a few months to a few years in order for the court proceedings to follow through completely. Living trusts completely bypass probate, saving your loved ones both time spent in court and money from court legal fees.
Privacy – Unlike a will, a living trust is not displayed to the public, with assets distributed to designated beneficiaries privately. Even out-of-state affairs can be handled this way, since probate courts for out-of-state properties are bypassed in living trusts. If you own out-of-state property and have a will, the estate will be settled in probate court proceedings that occur in the property’s state.