Estate Planning Williamsburg: Living Trust Vs. Will

If you were to ask most people, they’d have a vague idea about what a will and a living will are. Both have something to do with transferring and protecting assets, yet each has its own purpose.

In this guide, brought to you by Zaremba Center in Williamsburg, we will be going over the precise difference between a will and a living trust. After reading through this guide, if you think you would like to take your asset transfer and protection plan into your own hands, contact us and we can help you get started!

A will does four primary things for you:

It is where you name your beneficiaries
Provides instructions on how you’d like your assets to be distributed upon death
Allows you to choose an executor of will, who oversees the distribution of your assets
It is where you can name a guardian for raising minor children

A will goes into effect only after you die. It covers all the property you own by name but not any property you hold in a joint tenancy or trust.

For a will to be carried out, it must be through probate – where a court validates the legality of the will, allocates funds for outstanding debts and legal fees, and appraises all assets before they are distributed according to the instructions in the will.

A living trust is unlike a will in that it is a document relevant both after and before death. Similar to a will, it’s all about detailing how your want your assets to be distributed among your heirs and what should happen to your dependents, but it also details what should happen in cases when you are incapacitated or in other circumstances.

To summarize, the benefits of getting a legal trust are:

Helps you avoid probate
Saves you time
Provides privacy
Can help you save money, like on legal fees
Gives trustees the ability to take control without requiring a durable power of attorney

The first and most pronounced difference between a living trust and a will is that a will is practically and legally irrelevant until after you have died, while a living trust becomes legally effective as soon as it is created. One of the benefits of a living trust over a will is that it can help you bypass probate. Probate can take a long time, cost a lot of money, and lead to fees equivalent to an average of 5-10% of your assets’ value. Another major benefit of a living trust over a will is that it ensures privacy. While a will is a public document, open to scrutiny and protest, a living will is private and doesn’t require probate. However, in the short-term, a will is going to be less expensive to set up than a living trust, as well as will require less active management. Unless you actively fund the trust, it will have no benefits to your heirs. The biggest factor as to whether a will or a living trust is suitable for you depends largely on the size of your estate. A bigger estate will benefit more from a living trust, while a will may be more suitable if you don’t have much to pass on in the first place.