Living Will And Living Trust

Many people, when they begin to look at the best way to provide for themselves and their loved ones as retirement age approaches, can become confused between preparing a living will and a living trust.

There are similarities between the two, and both possibilities present their positive and negative aspects. A simple rule of thumb should be on gauging the value of the estate that will need to be divided up. If it is large enough that there is the possibility of estate tax being levied on it, it may be well worth it to draw up a living trust. If the estate is less that a certain sum, which can be decided from over which ceiling estate tax is levied in the state where the person making up the will lives.

On the other hand, with a living trust, benefactors can only be over the age of eighteen when the trust is drawn up. Any children or grandchildren under that age cannot be benefactors of a living trust estate even though they may have come of legal age after the trust is distributed.

The advantages of a legal trust are that it avoids the possibility of a long drawn out probate hearing in court. This can be a very expensive process that capable of eating up, sums of nearly 10 percent of the value of the estate.

A living trust can be set up by the trustees so that the people whose estate they are handling can enjoy some of the benefits of it while they are still alive, and if one passes on, then the survivor also will be provided for by the estate till they to pass away. Only then can the estate be dispersed to the named benefactors.

If any or both of the partners in a living trust become physically or mentally incapacitated, then their trustee has the power of attorney to handle their estate on their behalf. If only a will has been drawn up, and the same situations occurs then the benefactors of the will have the right to contest the will, with all the attendant unpleasantness.

A living will is much more flexible in the protection of minors. Parents have the ability under the terms of a living will to nominate a guardian in the event of the parents passing away before their child or children reaching legal age. While the courts have the right to veto their parent's wishes as to who will be their children's legal guardian, in most cases the court will usually respect the parent's decision. The legal responsibility of the guardian is to provide for the children's physical and financial welfare till they come of legal age.

To sum up, the principal differences between a "living trust" and a "living will" is that a trust lends itself much more for older people who have established a reasonable sized estate where the are liable to pay sizeable estate tax in the event of their passing to avoid these costly and unpleasant events, they will have to draw up a trust, and maintain a trustee with all the cost involved.

On the other hand, people who have fewer assets and are unlikely to have to pay estate taxes, should draw up a will. It is possible to establish a living trust, but the heavy and fixed expenses involved will seriously whittle away at the value of the estate.

Not only can a living will be used to disburse the person's assets, it can also contain details of requests that you can make regarding your loved ones. It is heartily recommended that every person should draw up a will. People who don't will be described as "dying intestate" and the complications involved in settling such an estate can be both distressing and expensive for those left behind.