Comparison Of The Advantages Of Establishing A Living Trust Against A Living Will

All of us at some time have reached that crossroads in life when we realize that the time has come to put our affairs in order and investigate how much of the possessions and assets we have accumulated in our life can we pass on to our loved ones. Certain people find it hard to face up to the fact that none of us is immortal, but more and more realize that death like taxes, are inevitable. And if we can't defeat death, we should at least not have the taxman have too much of a victory. Most people are aware that they should leave a will but very few take the trouble to investigate the real possibility to leave their estate as intact as possible without the IRS taking a major chunk in estate taxes. It is not difficult to source information on which of the possibilities they should opt for. This can vary depending on their financial circumstances and how the desire that their assets be distributed

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Obviously in order to be able to put pen to paper, they will have to consult an attorney. However many people like to do their homework first of all, either through their local library or by consulting the internet. Through both, they can learn a tremendous amount of their options, and the information gained there will generally make it a lot easer to arrive at a decision. They main thing is to choose, as people who pass away without leaving a will can cause tremendous problems and bad feeling for their loved ones. The last thing they would want to happen.

The two options are to prepare a living will or a living trust. There are many similarities between the two options. Both present possibilities and have their positive and negative aspects.

Basically what your attorney may advice you to do will largely depend on the size of your estate. If you arrive at your first meeting with your attorney with some hard facts and figures, they will rapidly be able to calculate if your estate is large enough that the IRS will be able to levy estate tax on it. The other advantages are that there is no need for probate after you pass away, you can avoid delay, expense, and possible bad feeling amongst your loved ones. Also as you have established a trust fund, you have already passed on the bulk of your estate to the trustee of your fund. This means that very little details of your personal affairs can be discussed in an open court.

The trustees of a living trust can set up so that the trustors can enjoy some of the benefits of it while they are still alive. Only when the trustor passes away can the estate be dispersed. This is known as a revocable trust, which has many benefits, as it can be updated and assets added to it, or removed form it right up to the trustors' death. Also the benefactors can be changed.

Another form of living trust is an irrevocable trust. As its name suggests, this is a much more rigid form of trust, which cannot be updated in any way.

In a living trust, if any or both of the partners become physically or mentally incapacitated, then their trustee has the power of attorney to handle their estate on their behalf.

Forming and maintaining a trust is an expensive operation. This can be justified by savings made by not paying estate tax. You and your attorney will need to decide if it is worth it to acquire this considerable expense, which will need to be paid in your life time

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To sum up, the principal differences between a "living trust" and a "living will" is that a trust lends itself much more for people who have established a reasonable sized estate

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.