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Weighing whether to create a will or living trust

Should you have a will or should you consider setting up a revocable or “living” trust? That all depends on a number of factors including the size of your estate, your concerns about costs as well as your comfort level. Both allow you to manage your estate and assets while passing them down to heirs and beneficiaries.

However, with a revocable living trust, you can do so while still alive. You have the flexibility to revoke or change the trust’s terms in your lifetime, moving assets into and out of the trust when you want. You can’t do that from a coffin when you have a will.

What is best for you?

There are many things to consider in choosing which one is best for you. The major difference between a will and a revocable trust is that with the latter, you can avoid probate – a legal process required when someone dies with or without a will.

Probate can be costly, time-consuming and often not hassle-free for heirs and beneficiaries. If you have a will, your estate must go through probate in order for your estate to get passed along to heirs and beneficiaries. Because a revocable trust is a private contract between you as the “grantor” and the trust, probate is not required.

Checklist of things to consider

Here are some things to consider when choosing between a will and a revocable trust:

  • A standard will should suffice if you don’t have a lot of assets.
  • It typically costs more money to set up a revocable living trust than a will. But you ultimately may save money by avoiding probate. The cost of probate may reach 5 percent or more of your estate.
  • Transferring assets from a revocable trust may be complicated and time-consuming.
  • Even with a living trust, you will need a will. Sometimes, people neglect to transfer all assets into trust, and assets not covered in the trust must be dispensed of through other means such as a will.
  • Another reason why you need a will: You can’t appoint guardians for your minor children with a living trust. You can only do this through a will.
  • A revocable trust may better prepare your estate if you become mentally incompetent and can no longer handle your affairs. If this happens, the successor trustee manages your financial affairs. A will does not allow for this. If you have a will and become mentally incapacitated, your relatives must request the court appoint a conservator to manage your affairs.
  • A revocable trust can protect your privacy. Because wills are submitted to the court in open probate, they are considered public record. As a result, anyone can visit the county courthouse and read it. This is not the case with trusts. Only the beneficiaries of a revocable trust have access to its documents, which only will become public record if a beneficiary or heir files a lawsuit to challenge the trust.

Only you can weigh the options in having a will or a revocable trust, and decide which route to take. A well-executed will can help your estate, but so can a living trust.

 

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