Who doesn’t like a solid plan? Well, having a will or living trust is a great way to ensure your final wishes are carried out and your loved ones are taken care of financially. Sure, you’ve probably come across the terms before, but what’s the difference between wills and trusts?

If you’re looking for answers, you’re in the right place. It’s a common question and one that has surprisingly simple answers. Here’s everything you need to know about these documents and how both can protect your assets and loved ones.

A Will

A will is a legal document outlining your wishes for what should happen to your belongings after you die. Notably, a will does not come into effect until after you die. If you become incapacitated, no one can use your will to make decisions on your behalf. For example, if you are in a coma, your will won’t play a part in the appointment of someone to make medical decisions for you.

Living Trust

A trust is also a legal document, but it has two key features that set it apart from a will. First, a living trust comes into effect as soon as it is created and not after death. Second, with a living trust, you can name someone (a trustee) to manage the trust on your behalf if you become incapacitated. As such, if you are in a coma, your appointed trustee can make medical decisions on your behalf without going through the court system.

To better understand each document, let’s look at how they can help you. Our discussion will center around the functions of each document.  

1. Avoiding Probate

Basically, probate is the legal process of transferring your assets to your heirs after you die. The probate process can be long, expensive, and stressful for your loved ones. A living trust allows the transfer of your assets to your heirs, meaning they don’t have to deal with the probate process. On the flip side, a will cannot help you avoid probate as it only comes into effect after your demise – and by then, it’s too late to avoid probate.

2. Requirement of a Notary Public

A notary public is a person authorized by the state to witness the signing of legal documents and administer oaths. You do not need a notary public to sign a will; however, you will need two witnesses. That said, all living trusts must be notarized for validity.

3. Guarding Against Court Challenges

Court battles over a will can be long, expensive, and emotionally draining for your loved ones. Unlike a will, a living trust is much harder to challenge in court. Essentially, the trust takes effect as soon as it’s created, whereas a will only comes into effect after you die (as we’ve noted earlier). As a result, disputes about the trust must be settled before your demise, which can be difficult if disagreements exist among your heirs.

4. Naming an Executor

When you create a will, you must name an executor – the person who will be responsible for carrying out your wishes. Ideally, you should implicitly trust someone to follow your wishes to the letter. With a living trust, you can name a successor trustee – the person who will take over if the original trustee is unable or unwilling to continue.

5. Property Transfer

A will can only facilitate the transfer of ownership of property titled in your name. Plus, it does not require the outright transfer of property upon creation. However, a living trust can facilitate the transfer of property ownership, including property titled in the name of the trust. This is possible because the trustee only holds and manages the property on your behalf. The document also requires the transfer of the property once created.  

6. Naming a Guardian and Property Manager for Your Children

If you have minor children, it’s crucial to name a guardian in your will. This person will care for your children if you die before they turn 18. At the same time, the property manager is the individual appointed to watch over your heirs’ inheritance until they reach the age of majority. Unlike a will, you can’t use a living trust to name a guardian for your children or a property manager.

Wills vs. Living Trusts: Which Should You Have?

Wills and living trusts serve different purposes, which is why it’s advisable to have both. Together, they provide comprehensive protection for you and your loved ones. That said, some of their functions overlap. For instance, they both allow you to name beneficiaries of your property.

Hopefully, the differences we’ve outlined help paint a better picture of how each document works. If you have questions about which document would suit your situation, please contact a legal expert familiar with wills and trusts to find out. They can help you understand the pros and cons of each option so you can make an informed choice.

By Manali