Advantages Of A Living Will Trust

There has been much conjecture recently in estate planning on the advantages and disadvantages of establishing a living trust against a living will. One thing for sure. Each and every person, no matter how modest their means and their worldly assets, should prepare a last will and testament.

After that the next question should be, "Should I opt for establishing a living trust, or just settle for a living will?" And the answer should be; depends.

It depends basically on the size of your estate. If your assets are considerable enough that you are liable to pay estate taxes, then you should seriously consider establishing a living trust. This should mean that your estate will be free of paying estate taxes, and you will be saved the long and costly probate process.

The disadvantages are that your assets will be taken out of your hands and will be handled by a trustee. The establishment of a living trust can be costly, as can be the trustee's annual management fees.

Once the trust is established, the trust records need to be maintained. All assets of the trust need to be registered and updated by the trustee.

Although on paper it may seem a great idea where only the tax man loses, as in any other situation, unforeseen problems may raise their head, demanding time and attention. When dealing with issues of property and taxation, a skilled attorney or other estate planning professional can be of assistance, with attendant fees. If this happens a few times during the life of the trust, it will probably dig considerably into the savings made by not requiring a probate.

Again on weighing up the advantages of a living will you have to separate them into two separate categories. The first is against not having a will at all and the second is against a having a living trust.

  • A living will can only be completed once you pass away. You can enjoy your money whilst you are alive as you see fit. Any assets that are left once you pass away can be distributed as you have requested. Many people who could possibly establish a living trust choose not to do so for this reason. They do not enjoy tying yup their hard earned capitol and assets in someone else's hands and do not necessarily trust anyone else's judgement. Especially a lawyer or a bank manager!
  • Control of your life and how you choose to die: If you prepare a will you can clearly state that you medical condition becomes grave enough, that you neither want to be resuscitated of kept alive artificially by life support systems. This clearly defined situation, in writing, overrides arguments among family members.

The principal disadvantage of dispersing your assets through a living will is that it will have to pass through probate in court, This is a long, expensive and potentially distressing experience for your loved ones. Sadly it is unavoidable according to current statutes.

The living will presents none of the administration difficulties associated with a living trust during the life of the grantor. The tax advantages can be readily calculated and the ability to preserve much of a lifetime's accumulation of assets intact is regarded by many as a definite plus. However unless the savings in estate tax justify it, many people still prefer the flexibility of a living will. A will reading can be a much more intimate occasion where every item left can be itemized and the benefactor named and even thanked from the grave by the person who is passing their lives' property to their loved ones.

A final note, a will is public property and anyone can have access to it, whereas a living trust is confidential and only the benefactors can have access to it.