What is a living trust and how does it differ from a will?

A living trust is a legal tool that allows an individual, known as the grantor, to place property and assets into a trust, which is managed by a trustee for the benefit of the beneficiaries named in the trust. The grantor can also act as the trustee while they are alive. The terms of a living trust can be changed or revoked by the grantor at any time during their lifetime, and the trust can be used to manage the grantor's assets in the event of their incapacity or death.

A will, on the other hand, is a legal document that specifies a person's wishes regarding the disposition of their assets after their death. A will typically goes through probate, which is a legal process supervised by a court to ensure that the deceased person's debts are paid and their assets are distributed according to their wishes. Unlike a living trust, a will does not provide any management of an individual's assets during their lifetime.

The main difference between a living trust and a will is that a living trust, unlike a will, can help avoid probate. This can result in cost savings and quicker asset distribution, as assets held in a living trust do not have to go through probate. Additionally, a living trust can provide more privacy than a will, as it is not public record like a will that goes through probate.

However, it is important to note that a living trust can be more expensive to set up than a will, and it requires ongoing maintenance to ensure that all assets are properly transferred into the trust. In addition, some assets such as retirement accounts and life insurance policies cannot be transferred into a living trust, and a pour-over will may be necessary to ensure that any assets not included in the trust are distributed according to the grantor's wishes.

In summary, a living trust is a legal tool that allows for the management of assets during the grantor's lifetime and provides asset distribution without probate, while a will specifies the disposition of assets after death and goes through probate. It is important to seek guidance from a licensed attorney to determine which estate planning tools are right for your individual situation.