With smart estate preparation, you may be able to avoid probate.
While both Living Trusts and Complete Wills state how your assets should be split following your death, they have a few major distinctions. Most importantly, Wills are simpler and less costly to draft, while Living Trusts do not need probate.
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What exactly is probate?
Probate is the legal procedure that takes place after someone dies. During probate, the validity of the person’s Will must be confirmed in court, their property must be inventoried and assessed, taxes and debts must be paid (together with attorneys’ and court costs), and the leftover property is divided among the heirs and beneficiaries. Probate becomes a subject of public record when a person dies.
The Advantages of a Living Trust
Because the assets you place in a trust are legally held by the trustee, not you, the trustee may transfer your property and assets straight to your beneficiaries upon your death. Be advised that these assets are still subject to federal estate taxation. Bank accounts, stocks, and certain registrations may be made payable-on-death, and joint-property can be transferred immediately. A Living Trust also enables you to handle your possessions without the need for a Power of Attorney or Conservatorship, as you would with a Will. You may also utilize trusts to distribute presents while you are still living. (ex: College Education Trust).
The Advantages of a Will
In certain circumstances, the trouble and cost of establishing a Living Trust may not be worth it. Most states let a certain amount of property to be passed on without probate or via a streamlined probate; moreover, property bequeathed to a spouse may be easily transferred. Whereas Living Trusts need ongoing maintenance and financing, Wills are simple to establish and may be easily updated or replaced as needed.
