Estate Planning: Living Trust vs. Simple Will - Which Do You Need?

April 12, 2007 - PRLog -- By Shawn Christopher

Estate Planning, put simply, is the process of arranging one’s affairs for when they pass away. This can usually be accomplished through the use of living trusts and wills. To most, the concept of estate planning sounds relatively straightforward. You probably feel that you should dictate how and to whom your assets are distributed after you pass away, with little concern for any other issues that may arise.

The reality of estate planning, however, is not always so simple. There are a number of factors to consider when preparing an estate plan, including, but by no means limited to, the following:

•The value and types of your assets

•Your current and future income

•Your distribution desires   

•Your mental and physical condition

•Other objectives, such as leaving a legacy, providing for a charity, taking care of your children or grand-children, or proving for someone with special needs

The most common estate planning instruments are wills and living trusts. There is a common misconception about the need to have a living trust. Many assume that they only need a simple will to best take care of their affairs when they pass away, and that only the wealthy need to have a trust. While this may be true in some instances, it often also leads to unexpected results.

Wills

A will is a document that lists how you would like your estate and affairs handled upon your death. The process by which this is accomplished is called probate, which is when a will is submitted to a court for administration after your death. The executor of the will, usually a person named in the will, is responsible for managing the affairs of the estate as it progresses through probate. The court will oversee your estate, payment of your outstanding obligations, and distribution of your assets according to the terms of your will. This process typically takes a number of months at a minimum to complete, usually involves your executor having to hire an attorney to handle the entire process, and is quite expensive for the estate. Further, since your will is submitted to the court, it becomes a public record for the entire world to see, which is problematic for those who desire a sense of privacy over their financial affairs.

Living Trusts

A living trust is also a document that details how you would like your estate and affairs handled after your death. However, unlike a will, a living trust does not require your heirs to submit to the probate process. The trustee of the trust, usually the person or company identified in the trust to handle the affairs of the trust, is responsible for managing the trust estate until the trust terminates pursuant to the terms of the trust. The terms of the living trust usually describe how one's assets are to be distributed. Further, this distribution can occur over many years if you so desire, thereby allowing you to retain a measure of control over your assets even after your death. You may also be able to place other restrictions over your assets, which can help to protect the assets from the creditors of your heirs or to ensure that your goals and objectives are met. Moreover, since your living trust is not submitted to a court, the terms of your living trust are kept out of the public domain.

Which Do You Need?

The determination of whether to choose a living trust or a will depends on a number of factors. In general, in Nevada, the main factor to consider is the value of an estate. For persons who do not own any real property and have an estate worth less than $20,000.00, the entanglement of the probate process is minimal. In such a scenario, only an Affidavit of Entitlement is needed to transfer assets. For people in this category, it is usually recommended to have a simple will. For those who own real property or have an estate worth more than $20,000.00, probate can get more complicated and costly. In these situations, it is usually advantageous to have a living trust. While it is usually less expensive to prepare a will than it is to create a living trust, this minimal savings is more than offset by the expense and burden of probate. However, as with most things that deal with your legal rights, your unique present and future state of affairs will dictate how you should best plan your estate.

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Shawn Christopher is an attorney licensed in Nevada and California. His office is located in the Las Vegas area. For more information, please review his website, http://www.shawnchristopherltd.com

Website: www.philfortune.com