What are the differences between a “will,” a “living will,” and a “living trust?”
Estate planning has its share of esoteric terms. But these terms make sense with some explanation.
- A “will” (also known as a “last will and testament”) directs where your property or assets will go upon your death.
- A “living will” (also known as an “advance directive to physicians”) is not a will at all. It is an instrument used to state your wishes as to life-sustaining medical care. With a living will, you can choose in advance whether to be kept alive through artificial means when there is little to no chance of recovery and you are unable to communicate your wishes, or you can name a loved one to make that decision for you. The State of Utah has created a standard form called the Utah Advance Health Care Directive, which our clients execute as part of their estate plans. This form allows you to name an agent for routine medical decisions (i.e., a “health care power of attorney”) and to state your end-of-life wishes about artificial life-sustaining care (i.e., the “living will”).
- A “living trust” (also known as a “revocable living trust”) deals with property and finances only. It holds your assets while you are alive (hence the descriptor “living”). It also directs where property will go when you die. The living trust is NOT the same thing as a will. It applies only to assets transferred to the trust; whereas, a will applies to all other assets. Your named successor trustee will immediately take over management of the assets in the living trust should you become incapacitated, thereby usually avoiding the need for a court to appoint a conservator. Upon your death, the trustee will distribute the trust property, no matter how great its value, to your beneficiaries, free of probate proceedings; whereas, property passing by will must be probated if more than $100,000 in value (excluding up to four motor vehicles, trailers and boats). Our wills direct that any property not already in your trust upon your death be “poured into” the trust. However, because of the $100,000 probate threshold, it is imperative that you “fund your trust” (i.e., transfer property to the trust) during your life in order to avoid probate.
In summary, a will (last will and testament) directs where property owned by you will go upon your death; a living will (advance directive to physicians) directs whether medical professionals should prolong your life artificially when you cannot communicate your wishes; and a living trust (revocable living trust), properly funded, directs the management of your property upon your incapacity or death without the need for court involvement. Contact us to learn more about these or any other estate planning instruments.
Tags: advance directive, advance medical directive, health care agent, health care directive, health care power of attorney, last will and testament, living trust, living will, revocable living trust, will
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