A living trust and a will are both estate planning tools used to distribute assets upon the death of an individual. However, they differ in several significant ways.
Firstly, a living trust is created while the individual is alive, hence the term "living." This type of trust is a legal arrangement where the individual (grantor) transfers ownership of assets to a trustee, who manages and distributes the assets according to the trust agreement. The trustee can be the grantor, or the grantor can appoint someone else as the trustee. The terms of a living trust can be changed or revoked by the grantor at any time during their lifetime. Upon the grantor's death, the trust assets are distributed according to the instructions outlined in the trust document, without going through probate court.
On the other hand, a will is a legal document that outlines how a person's assets will be distributed after their death. Unlike a living trust, a will only takes effect upon the death of the individual. The executor of the will, who may be appointed by the individual or by a court, is responsible for managing and distributing the assets according to the will's instructions. A will goes through probate court, which is a legal process that ensures the will is valid, allows creditors to make claims against the estate, and distributes the assets to the beneficiaries named in the will.
In summary, while both a living trust and a will can be used to distribute assets upon death, a living trust is created during the grantor's lifetime and avoids probate court, while a will only takes effect after death and goes through probate court. It is important to note that the effectiveness of a living trust may vary depending on the laws of the specific jurisdiction and the individual circumstances of the grantor. Therefore, it is highly advisable to consult with a licensed attorney to determine which type of estate planning tool is best suited for an individual's unique situation.
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