Difference between a living trust and a will
Almost everyone should have a will, but not everyone needs a living or irrevocable trust. If you have property and assets to place in a trust and have minor children, having both estate-planning vehicles might make sense.2
- A living trust is different from a will in that there is no probate period, so your heirs will receive the assets more quickly after your death. You can also add restrictions to how and when your assets are distributed.
- For example, your child will receive a specific amount of money on your behalf each year once he or she turns a certain age. The heir will pay any debts you have and then distribute everything else according to your instructions. Importantly, trusts provide more privacy than a will, which becomes a matter of public record.
- A trust is more expensive to set up and is typically used by wealthier individuals to avoid estate taxes, or by people who want more control over how their heirs access and use the assets they’re being left.
You should avoid leaving the future division of your assets up to the state. While you may not think you have enough wealth to make an estate, a will, or a trust worthwhile, a moderately funded retirement account, some equity in a house, or a decent life insurance policy may make you worth more than you think. So, take the steps now to make sure everything is set properly for your loved ones and your legacy.