What Makes A Will Or Trust A Living One?
“Look! It's moving. It's alive. It's alive... It's alive, it's moving, it's alive, it's alive, it's alive, it's alive, IT'S ALIVE!” – Dr. Frankenstein
Dr. Frankenstein succeeds in blurring the line between the living and the dead by assembling a monster from the bits and pieces of various corpses. Estate planners blur that same line in a much less gruesome way by working with clients to make plans while they are living for what they want to happen when they are dead. In fact, we even talk about making “living wills” and “living trusts” as part of many estate plans. But what does that really mean? In this blog post, we’ll cover the differences between wills and trusts and explain why some of them are “alive.”
Wills vs. Trusts
Both wills and trusts are popular estate planning documents, but they function in dramatically different ways even though many of the same things can be done with either device.
The fundamental difference between a will and a trust is timing. A will only goes into effect once its creator has died and a court has ruled on its validity. Trusts, on the other hand, can be created and used right away. Unless a dispute arises, a court does not need to oversee or interfere with the workings of a trust.
Trusts have become so popular that the only reason many people create a will nowadays is to designate a guardian for minor children.
It’s Alive
To complicate matters, there are also documents known as living trusts and living wills.
A living trust is a specific kind of trust. Typically, this term refers to a trust that is created and funded by someone while they are alive. The assets in the trust continue to be controlled by the trust creator basically the same as they would if they were not in the trust. The trust creator can even take assets out of the trust. When the trust creator dies, the trust assets are then distributed as the trust creator previously specified. As mentioned above, all this can be done without going to court and going through the probate process. This is faster and it keeps the details of the trust private.
A living will is a completely different animal. It’s not even a will in the traditional sense at all! A living will, which is sometimes called an advance directive or a power of attorney document, tells your family, friends, and medical professionals how you want to be taken care of should you be unable to make medical decisions for yourself. Depending on how they are drafted, these documents can empower someone to act on your behalf without your consent. It is also possible to have a document either go into effect immediately or spring into effect only when needed.
Hopefully this description clarifies things a bit and makes the estate planning process seem less like something that could only be done in Frankenstein’s lab.