An estate plan is a way to ensure your family members are financially stable and have a place to live after your death. When you begin your estate plan, you will choose between using a Last Will and Testament or a Revocable Living Trust. Both legal devices allow you to pass property and financial assets to your loved ones.

Last Will and Testament

With a Last Will and Testament, you list your property, name your chosen beneficiaries and state any final wishes that you have. A Will does not go into effect until after your death, therefore it cannot be used for other purposes such as planning for disability.

One downside to a Will is that it must endure probate. This is the court process of settling your debts and moving property from your name into the names of your beneficiaries. If your estate is small, you have few beneficiaries and you don’t anticipate any family contests of your Will, probate may only take a few months.

If, however, your estate is large with possible estate taxes or you have a complicated family situation with many possible beneficiaries or heirs at law, probate may be lengthy and cost a great deal of money.

Revocable Living Trust

A Revocable Living Trust, like a Will, assists in moving property to your heirs upon your death. To create your Trust, you can write a trust agreement stating your beneficiaries and any other wishes you have. You will then fund all of your property and appropriate financial assets into your Trust.

Unlike a Will, a Living Trust also has powers during your lifetime. As long as you are alive, your Trust holdings will belong to you. Your Living Trust also provides an Incapacity Plan. You can name a successor trustee to step in and manage your assets if you should become disabled.

Upon your death, your successor trustee will settle your estate much like your estate executor would with a Will. The main difference is that property titled in the name of your Trust may easily pass to your heirs without the need for probate. Probate is only necessary for items you did not fund into your Trust or if there is any question of a beneficiary for Trust property.

Tags: revocable living trust, trusts, Wills