Difference Between Living Trust And Will - More Than Semantics
December 15, 2004
By Kathy Curtis
Are these terms interchangeable? How do you know
when to get a will and when to get a living trust?
Asking the difference between a living trust and
a will is like asking if there is a difference
between social services and financial aid. While the
terms are not the same and their functions different,
each is very important and greatly strengthens the
other. You rarely establish a living trust without
the back up of an accompanying will. The situation
also holds true in reverse.
Reading Between The Lines
The greatest difference between living trusts and wills are who
is protected and how your possessions are protected. A will is created
to protect a person or loved ones. If you become incapacitated,
you can state your will to live under certain circumstances. Requests
on guardianship for your living minors are issues addressed by a
will. Other requests such as "you do not want to be kept alive
by a respiratory" are matters covered by a living will.
Conversely, a living trust transfers possessions into the power
of the trust. The creator of the trust is called a grantor, who
can also hold the title of trustee. The grantor transfers assets
into the living trust and identify who will own these possessions
upon her passing or upon her becoming unable to handle her affairs.
Differences That Go Hand In Hand
Like a hand in a glove, the will covers what the trust cannot. A
pour-over will permits the executor of your trust to transfer any
unassigned assets upon your death into the trust. A living trust
also identifies the funds to use toward your care should you become
too ill to handle the matter yourself. Many living trusts also protect
benefactors from paying probate or high taxes on your trusted assets.
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