It is extremely important to understand the value of planning ahead. Estate Planning is the key to protecting your wealth and safeguarding all those struggles, trials, and hard work you’ve invested in during your lifetime. A living trust or living will, in truth any sort of planning model to secure your life’s work, are fundamental ingredients in a person’s financial future and physical security.
The benefits of Planning Ahead
- Secure your own needs: it protects your assets in the event of an accident or becoming incapacitated. It takes into account cash flow, retirement packages, matters of healthcare proxies, and power of attorney.
- Wealth Distribution: without a will or trust, it is the government that decides how your assets will be divided. They decode your wealth and distributed it according to their beliefs. Precise documentation can end up saving your family valuable time, resources, headaches, and taxes.
- Minimizes taxes: a living will or trust can help you move your money strategically and in the most tax-efficient way possible.
- Protects your wealth: Lawsuits, claims, and hundreds of other legal maneuvers can be used against you and the inheritance of your kin to undermine their earnings. A living will or trust can shore up your wealth and preserve it against any legal incursion.
What is a Living Will?
A living will is a legal document that lays the groundwork for the sort of medical care a person does or doesn’t want in the event they become incapacitate and are unable to communicate their desires. The legal paperwork is more commonly known in judicial circles as an advance directive.
A living will specifies, in the case an individual suffering from a life-threatening injury or a terminal illness becomes unconscious, the way doctors, hospital staff, or hospice workers should treat them. It numerates whether or not a person desires heroic measures, the sort of life-sustaining treatment they want, and a multitude of other possible outcomes derived from a tragedy.
In the absence of a document like this, the decision concerning medical care – for example, the use of breathing or feeding tubes – becomes the responsibility of the spouse, family members, or appointed third parties.
What is a Living Trust?
A living trust, meanwhile, is yet another legal document but one carefully crafted to protect and manage an individual’s finances. A living trust is a two or three-party fiduciary relationship. A settlor, the first party, transfers a good to a second party, the trustee. The latter is given responsibility for managing the settlor’s good and administrating cash flow back to its origin.
Living trusts are normally done by individuals that want to bypass the often complex and expensive legal minefield process of probate. The living trust agreement designates a handpicked guardian to administer and properly manage the flow of money back into the trust and its initial holders, the settlor.
There are two types of Living Trust:
A Living Revocable Trust: the settlor can designate themselves as the trustee and have full control of the assets within the trust. This stipulation means they have more control over their money, but that said goods are still part of their estate; they are liable for estate taxes. In a living trust, an individual may change in the future their status within the trust and even dissolve it.
An Irrevocable Living Trust: the settlor abdicates and forfeits certain rights and control over the trust. A second party effectively becomes the legal owner of the goods. This absolves the individual of any taxes. Once an irrevocable living trust is made, the trustee – the beneficiary – is named and a settlor can’t amend their decision.
Living Trust Vs Living Will?
The main difference between these two is their sphere of influence in an individual’s future. A Living trust shelters a person’s financial well being and provides for that person until the day either the trust runs out or they die. A living will looks after a person’s health in the case of incapacitation; it buffers against meddling from individuals unaware of that person’s desires concerning their health-care.
Plenty of individuals confuse both concepts, mostly because they sound so much alike, but in reality, a living will and a living trust are two completely different legal documents; each serving two entirely different purposes. They’re both blanketed by general estate planning directives and both are fundamental when strategizing for the future.
- A living trust might cover all phases of your life. You can plan a living trust right out of the womb or it may be planned for you. You can activate a living trust in the case you find yourself under some legal avalanche. You might even plan a living trust so you can reach a much more comfortable retirement.
- A living will only covers what happens when you are at death’s door or severely incapacitated. A living will comes into play if you can’t voice your wishes. It only comes in effect in one stage of your life.
- A living will can be incorporated into an advanced medical care directive. It is a document that allows an individual to designate a health care proxy in the awful case that they become incapacitated.
- A living trust is a legal entity. It is in essence an individual, company, or organization with legally binding rights and obligations. A person creates the legal entity, as a third party, to hold and own their assets under a mostly ironclad contract.
- A living trust manages your affairs while you’re alive. It invests and spends your money according to your trustee’s wishes and following the lawful actions consciously agreed upon by the two or more entities that created the trust.
One key point of similarity between a living trust and a living will is that both protect an individual’s against mental incapacitation. If a person reaches a point when they are no longer sound of mind, or physically unable to perform and handle their everyday lives, a trustee – previously designated by them – will step in to manage their estate.
Buy a Living Trust Online
There are hundreds of vetted and certified services online for people that want to create a living trust without having to hire a lawyer or any sort of legal counselor. Most deal primarily with Revocable Living Trust.
To set one up, you first have to appoint a trustee and fill out some standard forms. Once the living trust documents are properly executed you will need to transfer the property in question into the said trust. For example, if you wish to place real-estate property into the trust you will have to transfer that location’s deed or a quick claim deed and list the trust as the owner.
A few places that offer online living wills and trusts:
Make A Living Will Online
Each state has its own directives as far as a living will goes. To start one online you have to go to each state and fill out the necessary forms.
A living will address 3 topics: Life support, life-sustaining treatment, end of life wishes.
They can be created individually within one day; it does not require an attorney or to be filed with a government office. All it requires is the Principal to enter their desires into a form and have the living will be signed in the presence of a notary public or witness (each state has different laws). Some can be done online through video calls.