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Untitled

Living Trusts vs Wills

 
Power of Attorney or Living Trust
Without
Power of Attorney
Incapacitation / Conservatorship

If you are mentally or physically incapacitated you may need or be appointed by the courts someone to manage your affairs, such as accessing keeping bills paid or running a business.
They must follow strict guidelines written in your living trust for maintaining your affairs and assets.
A conservator is appointed when a court decides that you cannot make basic decisions. 

The courts step in to prevent someone from taking control of your assets and misusing them.

At this point, your records and proceedings are open to the public. The court costs, legal bills, fees and bonds can be taken from your estate.
 
Living Trust
Durable
Power of Attorney
Power of Attorney

 Appoints medical and financial decision- making powers
The successor trustees of a trust act in place of a financial power of attorney. 

Working with banks and financial institutions is typically easier. Third parties such as banks are often more comfortable dealing with a successor trustee than they are dealing with a durable power of attorney.
Important for medical reasons but dependable for all financial needs. A durable power of attorney has a few downsides if used alone.

Some banks and financial institutions require custom power of attorney forms to be signed. 

Another downside is the easy access a durable power of attorney will have. This could open up the risk to giving someone access to your funds without accountability. 

 
Living Trust
Last Will and
Testament
Likelihood of Probate
None, if assets are properly placed in the trust.
Estates with $75,000 of real property (does not include assets with beneficiaries already listed) could be subject to formal probate. 
Average Length of Probate
No Probate, if assets are properly placed in the trust.
6 months to 2 years depending on the complexity of the estate.
Privacy
Yes.
No.  Your files can be accessed through the records office upon your death or in case of conservatorship.
Control of Assets
Yes. You have full control of assets just as you hold them now.
Yes.

 
Living Trust
Last Will and
Testament
Can Changes Be Made During My Lifetime?
Yes.  Revocable means the original creators of the trust (you) can change the language at any time.
Yes.
Guardianship of Minors
No. Guardians are nominated in a Last Will and Testament or Pour Over Will.
Yes.
Maximize Federal Estate Tax Exemptions
Yes.
No.
Ease of Contesting by an Omitted Heir 
Trusts are very difficult to contest. To invalidate a living trust you would have to prove the trust's creator was under duress not only on the day it was signed but each and every day it was in existence thereafter.

Assets in a living trust are not frozen during a legal challenge.
To invalidate a will you must either prove it was signed under duress or that the maker was incompetent on the day it was signed.

During a legal challenge the assets are frozen and cannot be distributed until the claim is resolved.

For a printable version of this chart  

How does a trust work?
Essentially, you transfer ownership of your assets to the trust so that when you pass, you own no assets so there is nothing to go through probate.

Your trust owns all the assets. Yet you still control all the assets in the trust just as you did before you created the trust. You (and a spouse) serve as:
  1. The Trustee(s) of your trust, responsible for managing all the assets in the trust for the benefit of the trustors.
  2. The Trustor(s) of your trust, the only one(s) able to make changes to the trust's language.
The most important step in setting up a trust is transferring your assets to the trust immediately after your Living Trust has been signed. This is a simple process that takes less time than one would imagine. Four Peaks Planning, Inc. helps you through this process.

To print our Pre-Planning Questions  

Summary:
  • Powers of Attorney appoint persons for medical and financial decisions
  • Living Wills state your intentions regarding the use of life support
  • Probate is the court process of changing title of assets to beneficiaries
  • Probate typically lasts 6-18 months and costs 3%-10% of the estate value
  • Your probate estate includes the full value of real estate
  • Properly funded Revocable Living Trusts avoid probate
  • Revocable Living Trusts from Four Peaks Planning, Inc. are only $750.




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Important: Please consult with Four Peaks Planning, Inc. before undertaking any actions. The information in this website is provided with the understanding that the publisher is not engaged in rendering legal, tax or investment advice. While every attempt has been made to provide current and accurate information, neither the author nor the publisher can be held accountable for any errors or omissions. You agree not to hold any employee of Four Peaks Planning, Inc. liable for action you take from the information on www.fourpeaksplanning.com.
Important: Please consult with Four Peaks Planning, Inc. before undertaking any actions. The information in this web site is provided with the understanding that the publisher is not engaged in rendering legal, tax or investment advice. While every attempt has been made to provide current and accurate information, neither the author nor the publisher can be held accountable for any errors or omissions. You agree not to hold any employee of Four Peaks Planning, Inc. liable for action you take from the information on www.fourpeaksplanning.com.