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LIVING TRUST OR WILL? HERE’S WHY THE ANSWER IS OFTEN “BOTH.”

| NOV 01, 2018

The most important things you pass on to your loved ones are memories and values. For everything else, you’ll need an estate plan.


A plan helps transitions go faster, smoother and gives you more control. Often the question is: Should I use a living trust, or a will? Depending on your situation, each may offer an advantage, and they aren’t mutually exclusive. Ask:

WHAT IS THE DIFFERENCE BETWEEN A LIVING TRUST AND A WILL?
In short: One is a legal entity, the other is a document. A will is a legal document that indicates how to arrange your affairs when you die. A living trust is a legal entity that can own and distribute property. You transfer ownership of your assets to the trust while alive, write up directions on what should happen to those assets, and name a “trustee” to oversee that process.

HOW LARGE AND COMPLICATED IS YOUR ESTATE?
Lots of assets + lots of beneficiaries = lots of questions. If you have active investments, own a business or have many beneficiaries, a living trust helps keep things current – add assets and directions to the trust rather than editing your will as things change. In simpler cases, a will may be fine.

HOW MUCH CONTROL DO YOU NEED?
Living trusts give control to a trustee; a will is executed by a probate court. If you leave a will, the court makes final decisions when things aren’t clear. In a trust, the trustee can act on your directions without court approval. Only a living trust, or a trust created under will lets you set specific conditions on how money is used or when it’s given.

ARE THERE SMALL CHILDREN TO PROVIDE FOR?
If so, you may want both a will AND a trust. Only a will lets you name guardians. But a living trust, or a trust created under will lets you specify what assets go to the beneficiaries for care of a child, and you can establish exactly when the child gets control of their inheritance and under what conditions.

DO YOU WANT A PLAN THAT CAN GO INTO EFFECT WHILE YOU ARE LIVING?
A trust lets you plan for more situations. For example, if you are incapacitated, a trust lets you establish the conditions when the trustee takes over – wills only go into effect once you die.

These are just some of the things to ask – there are also tax implications, charitable giving, final wishes and more. Work with an estate planner or wealth manager to figure out what options make the most sense for you and keep your plan up to date. 

The content available on this site is provided for informational purposes only, is not intended as an offer or solicitation for the purchase or sale of any financial instruments and should not be relied upon as an investment recommendation. Alerus Financial, N.A. and its affiliate subsidiary companies make no representations or warranties as to the accuracy, completeness or timeliness of the information. The information is not intended to provide legal or tax advice. Individuals should consult a qualified legal or tax advisor for advice specific to their circumstances.
 

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