Tuesday, June 22, 2010

Estate Planning 10: Trusts vs. Wills

Today's topic is an examination of the difference between living trusts or otherwise known as "revocable living trust" and last will and testament.

Living Trust

A living trust is written agreement similar to a will that creates a smooth transition upon incapacity and death. Unlike a will, a living trust is "living" because it takes affect during your lifetime. A living trust assist you to plan for incapacity and has provisions, which enable you to set up a trustee in case you cannot make financial decisions for yourself. Furthermore, a living trust avoids probate court and is a private document unlike a will. A living trust creates a smooth process and a process where your beneficiaries can simply avoid court and avoid the costs and expenses of probate court.

Unlike a living trust, a will is public information and your neighbor has a right to view your will. A living trust is not a public document and your neighbor or friend does not have any rights unless they inherit under your living trust. Moreover, a will must undergo probate court because a court must supervise the administration of the inheritance process. This is important because probate court requires court filing fees, surety bonds (unless waived), and attorney's fees (typically). A will often times creates will contests because mailing out notices to beneficiaries results in beneficiaries that are unhappy with the distribution of assets. Therefore, unhappy relatives challenge the validity and substance of the will.

Sean Robertson is an estate planning attorney and founder of Robertson Law Group, LLC. Robertson Law Group, LLC is a wealth preservation law firm concentrating in wills and trusts planning, estate planning, asset protection, and probate and guardianship law. Sean Robertson can be reached at (312) 498-6080 or (630) 364-2318.

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