Estate & Business Law
A living will is not the same as a living trust. A living trust is for financial affairs, while a living will is for medical affairs. A living will informs others about your preferences for life support if you are ever terminally ill or in a persistent vegetative state.
A living trust is not expensive when compared to all of the costs of court interference at incapacity and death. How much you pay for your living trust will depend primarily upon your goals and what you want to accomplish.
Not quite. A will can contain wording to create a testamentary trust to save estate taxes, care for minors, care for loved ones with special needs, etc. However, because it is part of your will, this trust cannot go into effect until after you pass away and the will is probated. A testamentary trust created in a will does not avoid probate and provides no protection for you during any period of incapacity.
Unlike a will, a trust does not have to die with you. Assets can stay in your trust, managed by the trustee you selected, until your beneficiaries reach the age(s) at which you want them to inherit. Your trust can continue longer to provide for a loved one with special needs, or to protect the assets from beneficiaries’ creditors, spouses, and future death taxes.
A durable power of attorney lets you name someone to manage your financial affairs if you are unable to do so. However, many financial institutions will not honor one unless it is on their form and was executed recently. If accepted, it may work too well, giving someone a “blank check” to do whatever he or she wants to do with your assets. It can be very effective when used with a living trust, but risky when used alone.
If you can’t conduct business due to mental or physical incapacity (dementia, stroke, heart attack, etc.), and do not have a living trust or power of attorney, then only a court appointee can sign for you. A legal process will take place to appoint a guardian and/or conservator to manage your affairs. Once the court gets involved, it usually stays involved until you recover or pass away. The probate court, not your family, will control how your assets are used to care for you. This public probate process can be expensive, embarrassing, time consuming and difficult to end. In addition, it does not replace probate at death, so your family may have to go through probate court twice!