Which is better? A living trust or a will?
Apr 30, 2012, 8:45 a.m.
There are two traditional choices to pass on an estate to your heirs. Revocable living trusts are becoming more popular among baby boomers. A will still remains the top choice, but living trust benefits are challenging living will benefits for supremacy in recent years. Some estate planners believe that living trusts offer both "before-death" as well as "after-death" features.
The best choice depends on your circumstances. Either option can be the most advantageous selection as your situation warrants. Always consult with an experienced lawyer or veteran financial advisor to learn of your best option.
Most people are aware of living will benefits. However, in recent years, more challenges of validity of wills have been filed, helping to increase the popularity of revocable living trusts. Understanding the primary features will help you consider will and living trust benefits more accurately.
A revocable living trust legally designates someone of your choice to manage your assets. Most of these are revocable, permitting you to change, modify or dissolve the trust, as long as you remain "mentally competent." It's a "living trust," because you create it while you're alive. Upon your death, the trust becomes irrevocable and cannot be changed.
Like all trusts, there are three components. The creator of the trust, the trustee(s) who will manage the trust and the beneficiaries of the trust. To continue to have full control of the trust property, you should name yourself (and your spouse, if appropriate) as trustees while you're alive. You'll retain the authority to do what you want with your assets.
Living will benefits and living trust benefits both include your inheritance instructions, naming those you want to have your assets after your death. If you have considerable assets, living trust benefits may outweigh living will benefits. Conversely, if your estate is rather modest, a correctly executed will should be your best -- or, at least -- equally beneficial option.
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