A living trust is a very popular estate planning tool that can provide some significant benefits to you and your estate. However, like other estate planning tools, a living trust is not capable of serving all your estate planning needs.
When people come to an estate planning lawyer and ask for help in creating a living trust, they sometimes ask if they still need to create a last will and testament. Though useful, a living trust is not a replacement for your will. You need to create both of these documents to have a comprehensive estate plan that meets all of your needs. Here is what you need to know about replacing a will with a living trust.
Living Trusts, Probate, and Privacy
Living trusts are excellent estate planning tools because they provide several benefits. First, your trust will be able to help your estate avoid probate as much as possible. After you transfer your personal property to the living trust, the living trust becomes the effective legal owner. Since your trust can survive you after you die, you can use the trust to transfer property to your heirs without the necessity of having to go through probate.
Also, because your trust allows you to avoid probate, it also allows you to keep your affairs private. Probate cases are open to the public, but transferring property through a living trust is a private process.
Finally, you can also use your living trust to help protect your property should you become incapacitated. If you create a trust that names a successor trustee who will take over managing trust property should you lose your ability to do so, you can ensure that someone will be there to manage your financial affairs in the event of your incapacitation.
Wills, Probate, Executors, and Guardians
Though the benefits you obtain by creating a living trust are significant, there are some areas a living trust doesn’t cover. Even though your trust will help you avoid probate, in some circumstances you may still need to appoint someone who will manage your estate after you die. You can only appoint this person, called an executor or personal representative, by nominating someone in your last will and testament.
Your will is also essential if you want to name a guardian who will assume parenting rights over your young children should you die. If you don’t have minor children this is not an issue, but parents who have young children would be prudent to create a will as soon as possible. Doing so will ensure that your chosen guardian will be able to take over parenting responsibilities should you die or become incapacitated.