Understanding Trusts and Wills
Weâ€™ve noticed a lot of our clients are curious about trusts and wills, and specifically, what the difference between the two of them is. Here is some helpful information for making sense of them!
Living trusts are documents you create during your lifetime that dictate how youâ€™d like your assets handled and distributed. They involve designating a trustee who will hold legal possession of certain assets, and they can make decisions about your assets while youâ€™re alive, or alive but incapacitated.
There are two types of living trusts: revocable trusts and irrevocable trusts. If you opt for an irrevocable trust, it means that once itâ€™s signed, you canâ€™t make amends to it. Revocable trusts, on the other hand, can be amended or canceled as youâ€™d like.
Wills are legal documents that dictate how youâ€™d like your assets distributed in the event of your death, as well as who will take guardianship of your minor children when you die.
What is the Difference Between Trusts and Wills?
Unlike wills, living trusts take effect as soon as theyâ€™re created, not when the grantor dies. If youâ€™re incapacitated and unable to make decisions, the designated trustee on your document can make decisions for you. With wills, no matter your condition, they do not take effect until the time of your death.
Should I Choose a Living Trust or a Will?
Often, people prefer living trusts over wills because they help their heirs avoid the probate process (proving the will) but they are often more costly than wills. If you have significant wealth and other assets, having a living trust in place is a good idea.
If you have young children, wills are often preferred over trusts because you can use them to name guardians for your minor children when you die. Living trusts donâ€™t include naming guardians for your children, but you can use them to leave property or assets to your children.
To learn more about protecting your assets, get in touch with the team at Lupton and Luce Insurance today!