Most people are familiar with the idea of a will, but there is a lot of confusion about living trusts. Part of that confusion is because there are many different types of trusts. Despite that confusion, trusts are increasing in popularity. Most people find that living trusts are a superior solution in reducing costs and simplifying the process of administrating an estate.
How a Will and Trust Are The Same
Now what is a living trust? It’s a legal document similar to a will. A trust and a will both say who will be in charge. A trust and a will both say who will get what and when. They’re both signed and dated at the end. So what’s the difference between a will and a trust?
The Key Difference Is…
A living trust can avoid probate. But not every living trust is going to avoid probate because how a trust is implemented and managed makes a huge difference in how effective it is. That is one of the distinctions between DIY trusts, and working with an experienced estate planning attorney. With DIY trusts, you are on your own to implement and manage the trust, but with an experienced estate planning attorney working with you, you have professional guidance to ensure everything happens properly, and at the end of the day, your trust will actually work.
The Crucial Second Step
There is a second step that occurs with the trust that does not happen with a will. You transfer ownership of your assets into the trust. It is the crucial second step that allows your assets to avoid probate. The probate court is there to change title to your assets after a person dies, but because you’ve already changed title of your assets into your living trust, there is nothing for a probate court to do, and you’ve successfully avoided probate.
Wait, Do I Lose Control?
In a word – no. Other than changing title or ownership, nothing has really changed. You’re still in charge, and it is business as usual. You’re in control! You buy, sell, or refinance your house just like you did before. You can open and close bank accounts just like you did before. You file your income tax return just like you did before. Your property taxes doesn’t change. And remember, your trust is completely changeable. You can amend it, replace it, or you can completely revoke it. It is all up to you!
Conclusion
If you own property, or have children, the living trust is the preferred estate planning vehicle.
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