Money Matters

Difference between a Will and Living Trust

Will
A will is a legal agreement that explains how your estate and property are to be distributed after you die. For example, you can designate the beneficiaries for your house, car, vacation home, antique and collectibles.

A will costs less initially but it may incur substantial probate cost. All wills are subject to probate proceedings. The majority of probate documents, such as admitting your will to the court, appointing your personal representative, maintaining your estate, paying off your creditors and taxes, and distributing what remains to your beneficiaries are accessible to the public. Additionally, the probate may be a slow, detailed process.

Living Trust
A living trust is a revocable trust established during an individual’s lifetime. Generally, a living trust has a creator, trustee, and beneficiary. Most of the time, the creator is also the initial trustee. He or she has the power to amend the trust at any time and holds the title of trust property during his or her lifetime. The trustee invests, manages the property, and distributes income to beneficiaries under the trust term. Whenever the creator becomes incapacitated or disabled, the trust will be managed by the successor trustee who will pay bills, buy food, and provide shelter and care for the trust creator. Upon the creator’s death, the successor trustee will act under the trust provision to either “housekeep” the trust asset, invest and manage the property for alternate beneficiaries, or distribute the remaining assets to specific beneficiaries.

Usually a living trust costs more to prepare, fund, and manage. It becomes irrevocable when the creator dies. A living trust can avoid probate costs since it is not subject to probate proceedings. Most important, all trust records remain private, unless a trustee or beneficiary demands court approval of accounts.

Conclusion
Both a will and a living trust will bring benefits to the taxpayer. A living trust is often preferred for people with privacy concerns. A will is adequate for most people with relatively modest estates since it is less complicated and costs less than a trust.



	Sales Tax - Rental Property Life Insurance Good Debt vs. Bad Debt Difference Between a Will and Living Trust Tax Freedom Day Small Business/ Self-Employed Individuals Retirement Options Establishing a Financial Safety Net Financial Tips 2010 Tax Relief Act for Individuals Tips for Starting Your Own Business Tips for Small Business / Self-Employed Individuals Archived Video Tips	Difference between a Will and Living Trust Will A will is a legal agreement that explains how your estate and property are to be distributed after you die. For example, you can designate the beneficiaries for your house, car, vacation home, antique and collectibles. A will costs less initially but it may incur substantial probate cost. All wills are subject to probate proceedings. The majority of probate documents, such as admitting your will to the court, appointing your personal representative, maintaining your estate, paying off your creditors and taxes, and distributing what remains to your beneficiaries are accessible to the public. Additionally, the probate may be a slow, detailed process. Living Trust A living trust is a revocable trust established during an individual’s lifetime. Generally, a living trust has a creator, trustee, and beneficiary. Most of the time, the creator is also the initial trustee. He or she has the power to amend the trust at any time and holds the title of trust property during his or her lifetime. The trustee invests, manages the property, and distributes income to beneficiaries under the trust term. Whenever the creator becomes incapacitated or disabled, the trust will be managed by the successor trustee who will pay bills, buy food, and provide shelter and care for the trust creator. Upon the creator’s death, the successor trustee will act under the trust provision to either “housekeep” the trust asset, invest and manage the property for alternate beneficiaries, or distribute the remaining assets to specific beneficiaries. Usually a living trust costs more to prepare, fund, and manage. It becomes irrevocable when the creator dies. A living trust can avoid probate costs since it is not subject to probate proceedings. Most important, all trust records remain private, unless a trustee or beneficiary demands court approval of accounts. Conclusion Both a will and a living trust will bring benefits to the taxpayer. A living trust is often preferred for people with privacy concerns. A will is adequate for most people with relatively modest estates since it is less complicated and costs less than a trust.