The majority of Americans (68%) don't have a will. Broadly speaking, anyone with an estate needs to have a binding will. However, depending on how your estate is dispersed to your nominated beneficiaries, you might find yourself asking a question—are your interests (and those of your beneficiaries) better served by a traditional last will and testament, or a living trust?
Traditional Wills
A traditional will allows for the distribution of specific gifts (physical and/or cash assets) to your nominated beneficiaries. You will appoint an executor of your estate, and this will typically be your next of kin, another family member, or even your attorney. The executor is then tasked with handling probate, which is the legal process of overseeing the disbursement of your estate after your death, dealing with disputes as they arise. Traditional wills aren't necessarily complicated to draft (potentially aside from the decision-making process that determines the specifics of disbursement), and for many people, an at-home will kit will be sufficient.
Living Trusts
A living trust is created when you formally establish it and nominate a trustee. The terms of the trust still require the nomination of beneficiaries, and the trustee simply retains those assets until the time comes to distribute them in line with the terms of the trust. It's called a living trust because it's created while you're still living. There are specific purposes of a living trust, which can differ from a traditional will.
Privacy and Precision
One of the key benefits of a living trust is that this arrangement bypasses probate, permitting the immediate disbursement of assets to beneficiaries upon your death. This means that any disputes can be avoided because the specific assets are immediately distributed, and the physical or cash assets (or percentages of) can remain private. None of your beneficiaries will necessarily know what the other has received, unless they should choose to disclose this information to each other. Additionally, you're able to task your trustee with staggering the disbursement to certain beneficiaries, such as if you're concerned about someone's financial management skills, and prefer to leave them an ongoing source of income, as opposed to a lump sum. This means you have the ability to be more precise with your disbursement.
Depending on the composition of your estate and your relationship with your beneficiaries, a traditional will might be all that is required. But when you need more control over disbursement and wish to avoid any conflicts amongst your beneficiaries, you should consider talking to an attorney about establishing a living trust. Contact an attorney for more information.
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