Will vs. Living Trust: Which is Right for You?

Will vs. Living Trust: Which is Right for You in Montana?

Whether you are a person of modest means or someone with considerable wealth, you have an estate. Naturally, you want control over the allocation of your assets after you die and to be sure that your family is properly cared for. This is where an estate plan comes into play in Montana.

There are two strategies for allocating your assets after death: a will and a living trust. While the main purpose of both a will and a living trust is to allow you to designate beneficiaries for your property, they serve different purposes. Deciding which is right for you depends on what you’re looking to accomplish and your survivors.

Learn more about making a will or trust and find out which is more appropriate for your estate planning process from the professionals here at Tanko Law Office.

What is a Will and a Living Trust?

A will, a document that’s been signed and witnessed, dictates how your assets will be allocated after death. With a will, you can designate who will receive your assets. A Will can be revoked or amended at any time, and can also include an appointed guardian for minor children.

A living trust, on the other hand, provides asset management both during your lifetime and after your death. Unlike with a will, a trust requires you to designate beneficiaries and transfer property into the trust. You can serve as your own trustee with a successor appointed upon death or incapacity without the need for court intervention. This helps avoid the publicity, expense, and inconvenience of court-supervised distribution of assets.

Beyond that, there are some situations in which a will or a trust could be a better choice.

Leaving Property to Minors

Minor children can’t own any assets of significant value, so if you leave assets to them, it must be managed by an adult until they reach 18. Leaving assets to a minor in a will requires an adult to be named to manage it. You can also set up a testamentary trust or name a custodian under the Uniform Transfer to Minors Act. If you neglect to name an adult for this responsibility, the court will appoint one.

With a living trust, the appointed trustee manages the assets until the child reaches an age determined by you. There’s no need for the additional paperwork or planning involved.

Revising Your Document

Both wills and living trusts allow you to revise your document if your wishes or circumstances change. However, this is only true of revocable living trusts. Irrevocable trusts are finalized and not subject to revision, making them generally more complex to create than revocable trusts.

Probate Considerations

Probate is a judicial process in which a will is proven by the court and acknowledged as a valid public document that establishes the decedent’s last wishes. Probate can be a long and involved process, not to mention expensive, and it’s not always necessary. Because of this, many people choose to avoid probate in planning their estate in Montana.

Assets left in a will go through probate, but assets left in a living trust don’t. With a living trust, all assets can be distributed to beneficiaries right after death, without any additional fees or interference from the court. Even so, avoiding probate isn’t always a top priority. For individuals with few assets or significant debts, a living trust may offer little to no advantage.

Privacy

Living trusts must be signed and stamped by a notary public, whereas a will does not. Wills do require witnesses, however, which includes two people who aren’t included in the will’s beneficiaries. If getting through probate is a concern, a self-proving affidavit that’s notarized is helpful. After death, a will becomes a public document, while a living trust remains private. For this reason, people who value their privacy tend to prefer the discretion of a living trust.

Protection from Contest

Although a contest to a will or living trust is rare, it can occur nonetheless. Oftentimes this happens if the will doesn’t comply with legal requirements or the maker of the will wasn’t of sound mind. Generally, a living trust is harder to contest than a will.

Avoiding Conservatorship

If you become incapacitated or otherwise unable to manage your affairs, a living trust can appoint a spouse, child or other individual the authority to manage the assets. A will doesn’t offer this option, but a power of attorney does leave the option to appoint someone to manage finances.

Children’s Guardianship and Assets

If you have surviving minor children, a will allows you to name guardians and appoint individuals to manage the assets left to them. These options are not available with a living trust.

Naming an Executor

An executor is a person who is tasked with carrying out your last wishes and distribution of assets after your death. They must communicate with court, resolve debts and distribute any assets in probate. A will uses an executor, but a living trust does not. A living trust has a successor trustee who manages the assets in the trust. Most estates require an executor to keep the process streamlined, so it’s practical to create a will and name an executor, regardless of how much property is left in the trust.

Taxes and Debts

Before any assets can transfer over to beneficiaries, all debts and taxes must be paid. With a will, you leave instructions for how you want these debts handled, especially if you’re using your will to forgive debts owed to you. This isn’t a good idea with a living trust, since a creditor could go after the trust, seek its termination and gain access to the assets within it. This is because of the very terms of the trust, which allow it to be changed or terminated at any time.

Planning Process

When it comes to the estate planning process, wills are much simpler. A will is just a document devoid of difficult language, which must be witnessed by two impartial people and signed by the will maker. A living trust isn’t complicated either, but it’s not quite as simple as a will. Living trusts cover all the trustee’s responsibilities, making them longer and more complex overall. Living trusts also require more formality to form which adds a few steps to the whole process and a living trust must be funded in order for it to be effective.

What Do Wills and Living Trusts Not Cover?

No matter their differences, there are a few things that neither a will nor a living trust can be used for, including:

• Reducing estate taxes: Neither document can reduce estate tax, but not all estates owe taxes.
• Distributing money to pets: Pets are legal property themselves, so they can’t own property. Still, pets are important for some people, so a will can instead include provisions for a pet caretaker and a pet trust can be made.
• Leaving final wishes: Final wishes, such as viewing or funeral instructions, can be left in a will, but not in a living trust. Instead, they should also be put in a separate document altogether.
• Leaving passwords for accounts: The executor of your will may need to access your online accounts or devices after your death, so it’s important that they have login information. This information shouldn’t be in a will or a living trust, however. Instead, like the final wishes, sensitive login information should be left in a separate document that’s stored in a secure location with other estate documentation.

Learn More at Tanko Law

Everyone should have a will. Taking the step to form a living trust should be discussed with your estate planning attorney to confirm it will work for you. Factors like age, wealth and marital status all determine the need for a living will, so it’s best to speak with an estate planning attorney to decide if it’s the right choice for you.

If you’re ready to get started with your estate planning in Montana, Tanko Law can help. Our estate planning attorneys are here to offer advice and guidance in deciding between a will or trust, so contact us today to see what we can do for you!