Living Will & Living Trust: What Is the Difference?

There is some confusion associated with the terms Living Will and Living Trust. Are they the same type of thing? Not at all. To help you avoid this confusion let me give you a short description of each. One is about your health and the other about protecting your assets and possessions.

Living Will Is About Health Care

A living will is a written instrument that expresses your desires in regard to medical attention. In the living will, also known as an advanced medical directive, you state you intention not to be attached to or kept on artificial life prolonging measures or be given extreme medical procedures in the event that you are either terminally ill or when there is no prospect for your recovery from a serious illness.

Most people sign a living will when they want to avoid being kept alive by technology to maintain a vegetative state or to prolong the dying process. So a living will governs your health care or medical needs. It has nothing to do with your home, your possessions or your financial assets.

Living Trust Is About Possessions

A living trust on the other hand, has nothing to do with your health care or medical needs. It has everything to do with your home, your possessions, and your financial assets.

A living trust is a written document that governs how your home, your possessions, and your financial assets will be managed during your lifetime. It also describes how your several assets will be used or distributed in the event or your incapacity or upon your death.

Because your home, your possessions, and your financial assets will be titled in your trust’s name, there will be nothing in your name to require court interference should you die or become incapable of managing your own affairs.

The trust has three parties. The Settlor (or Grantor) is the person setting up the trust. The Trustee is the manager of all the trust assets. The Beneficiary is the person or persons who have the benefits of the trust assets while they are in trust.

If you set up a trust for yourself, you can be all three parties. You will be the Settlor; you may still manage the trust assets as the trustee. And you can be the lifetime beneficiary.

Your written trust agreement also names someone to replace you if you can no longer act as trustee. This person is called a successor trustee. You are the lifetime beneficiary, but you name others to become beneficiaries upon your death.

The trust avoids a probate at the time of your death because there is nothing in your name. It’s all in your trust. The terms of the written trust agreement specify how your estate will be distributed.

For the same reason, your trust also avoids the need for a court conservator to be appointed in the event of your incapacity. The terms of your trust will govern in all matters consistent with its terms and without judicial interference.

Just think, all your instructions can be followed without the need for judges, lawyers, and nosy relatives.Don’t you think you should have a living trust and also a living will? Both documents are integral parts of good estate planning and are vital instruments protecting your exact wishes for yourself and your possessions.

Copyright 2007 Legal Awareness Series, LLC

Steven W. Allen, JD, is an expert Estate Planning Attorney with over 30 years experience, given over 750 presentations in several states, a member of the National Speakers Association, and has authored four books. Visit http://www.StevenAllen.com for more tips and tools to keep and protect your assets. Download 3 free chapters of his latest book “You Can’t Take It With You… So How Will You Leave It Behind” at http://www.EstatePlanningDr.com

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3 Responses

  1. can a living trust protect you from medical estate recovery? if not what can?

  2. Steve, I have attached a site that talks about medical estate recovery programs. Let me know if this helps.

    http://dpss.lacounty.gov/dpss/estate_recovery/default.cfm

  3. I think these vary from state to state? You may want to contact your county pertaining to their guidelines.

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