Participants 8
Introduction: What is a Living Will and a Living Trust
A living will and living trust are often used interchangeably. They can be legally defined as two completely different entities (living wills/living trusts), but have a similar purpose in regards to estate preparation. Many people confuse the two, however in lay terms, they perform entirely different functions.
A living trust is a legal entity which you set-up to protect your assets once you become incapacitated. Your assets are placed in a separate trust that only you or another designated individual has access to during your lifetime. Upon your death, any assets which were initially put into your living trust will be distributed according to the instructions in that trust document.
A living will is a document which states your wishes for medical care should you become terminally ill or legally incapacitated. I’ll walk through these concepts and provide a quick overview of what they mean and how they differ in this article.
When you and your loved ones are confronted with the end of life decision, it can be one of the most difficult conversations to have. Discussions about wealth distribution, organ donation and funeral arrangements are not easy topics of conversation for anyone. Having a living will in place can make these discussions easier for you, your family and loved ones to handle.
Living Will:
While it is difficult to think about death, the best way to protect yourself and your loved ones is to complete a living will. A living will lays out your wishes for life-sustaining medical treatments in an event of terminal illness or living in a persistent vegetative state. A living ensures that your wishes will be followed; this also helps ensure that you are receiving the care you want and need.
A living will sets forth your present wishes concerning medical treatment should you be terminally ill, in a permanent vegetative state, or otherwise permanently confined to a medical facility. A living will also can be used to set forth your choices for end-of-life decisions if you are not able to communicate for yourself.
For those of us who have prepared a living will, it is a great comfort to have the foresight and insight to foresee what could happen to us in the future. We are able to put our wishes into writing so that the people around us who love us can do what we want done if we cannot communicate our choices for treatment at that time and place in our lives. For those of you who are not prepared with this document and for whom this serves as a guide, I hope you take the time to prepare your living will before you need it.
Living Trust:
A living trust is a legal document which allows a person to transfer ownership of assets to another individual during their lifetime. It is often used during preparation for long-term care or end-of-life decisions and can also be used to ensure that your assets can be transferred with the least amount of hassle after your death. A living trust is designed to allow for the easy transfer of the trust creator or settlor’s assets while bypassing the often complex and expensive legal process of probate.
In reality, property can be transferred with a living trust in any situation where the property is actually owned by the person desiring to create the trust. The party who desires to obtain the property of another must have authorization in law to receive the property, so it isn’t actually necessary to create a legal relationship via will or trust. However, because your biggest assets are usually real property, almost all living trusts also include a will so that final disposition of all your assets can be accomplished.
To summarize, a living trust helps you avoid probate proceedings, but it’s not really meant to be the estate planning equivalent of the “easy button.” It’s important to understand what a living trust is and is not before deciding if one is right for you.
Conclusion:
Being aware that the document is there puts the person prepared with a living will at ease. They know their wishes will be carried out if, for some reason, they are unable to communicate those wishes themselves. Taking the time today to prepare this form for your own estate planning shows your extreme consideration of your loved ones’ wishes and desires, but it also shows you have accepted that no matter how smart or healthy or rich you are, sooner or later life changes and things happen when we least expect them.
It is best to prepare a living will because, if not, your loved ones will be trying to figure out what they think you would want and be under undue emotional pressure. They must try to imagine what you would want in a situation where there is no precedent, no guide to help them determine the proper course of action for your care.
A living trust can be a valuable tool and it is well worth the effort it takes to create one. The benefits and purposes of doing so are relevant throughout the life of the individual who has created the trust. That individual will obtain many benefits by creating a living trust. These benefits include a specific method for paying bills and other items, avoiding probate issues, maintaining privacy with asset transactions and handling financial conflicts in family situations.
It can be difficult to keep up with all the various Wills and Trusts that are available today, let alone the various Estate Planning tools that are now becoming available. But there is no question that the current state of affairs regarding our healthcare system and the cost of end-of-life care makes it necessary to begin thinking in advance about what kind of medical decisions we want made for us if we ever become incapacitated and unable to make those decisions for ourselves.