There can be some confusion with regard to estate planning terms that sound similar. We try to clear some things up on our blog from time to time, and with this in mind, we will look at the difference between living wills and living trusts in this post.
Advance Directive for Health Care
Most people have heard of the estate planning document called a last will or last will and testament. Since this type of will is used to transfer property, many people assume that a living will does the same thing, but in a slightly different manner.
In reality, a living will is not something that is used to facilitate asset transfers. A living will is a very necessary advance directive for health care.
People often become unable to communicate health care decisions toward the end of their lives. To prepare for this eventuality, you could execute advance directives for health care that state your wishes, and one of them is a living will.
There are times when physicians can keep a terminally ill patient alive for an indefinite period of time through the utilization of certain life-sustaining measures. These measures would include artificial hydration, feeding tubes, and mechanical respiration.
Different people have different ideas with regard to how they would want doctors to proceed under these circumstances. You state your own wishes with regard to the utilization of these life-sustaining measures when you create a living will.
When you have a living will in place, doctors would be legally compelled to follow your instructions, and your own preferences would be honored.
A revocable living trust is a document that is used to facilitate postmortem asset transfers. These trusts provide multiple benefits.
You do not lose control of assets in this type of trust. As the grantor of the trust, you could act as the trustee initially, and you could also act as the beneficiary. Plus, you could revoke the trust entirely if you choose to do so.
When you create the trust declaration you name a successor trustee, and you name successor beneficiaries. You can leave behind specific instructions that the successor trustee must follow.
You could instruct the trustee to distribute assets in a measured fashion over an extended period of time if you are concerned about the beneficiary spending the money too quickly.
You can also account for the possibility of incapacity when you create a living trust. A disability trustee could be empowered to administer the trust in the event of your incapacitation.
Schedule a Free Consultation
If you are ready to put a custom crafted estate plan in place, our firm can help. We offer free consultations, and you can send us a message through our contact page to set up an appointment: Indianapolis IN Estate Planning Attorneys.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.