Living Trusts And Living Wills Guide
Understanding Living Wills And Living Trusts
If you are beginning to learn about various estate planning tools, distinguishing between a living will and a living trust might be something that is confusing for you. Each of these is an important part of an estate plan. However, they each have their own distinct purpose. That is why it is critical to understand the differences between the two.
Below is an overview of the distinct roles that living trusts and living will play within the estate planning process to help you understand how to get them incorporated into your estate plan and to ensure you make an informed decision.
A last will and testament and a living will are sometimes confused. The last will and testament details who will receive and administer your property after your death. On the other hand, living will detail your health care wishes in case you become incapacitated. It is a document that details your preferences in the event you are unable to voice them or make your own decisions. A living will in Nevada normally focuses specifically on what extent you would like to have artificial nutrition or life support devices prolonging your life if you become incapacitated, and also who will make health care choices on your behalf if you cannot act for yourself. This document is very important and should be put in place and incorporated into your estate plan.
There are big differences between living wills and living trusts. A living trust is a type of legal entity and document that holds title to your assets and details to whom and how your asses will be distributed after you die. It also sets forth how your assets will be managed should you become incapacitated. There are three main parties involved in creating and managing a living trust: (1) a beneficiary, (2) a trustee, and (3) a grantor/settlor/trustor.
The grantor/settlor/trustor is the individual who creates the trust. The trustee is the individual who manages the trust’s assets. The beneficiary is the individual who is entitled to receive the assets. Normally, the individual who creates the trust will serve in all of the capacities while competent and alive. The trust will detail who the beneficiaries and trustee will be if the creator of the trust becomes incapacitated or dies.
Living estates are a very effective tool for administering your estate upon your death or during your incapacity. When drafted and managed properly, they can help to avoid probate court proceedings and guardianship, which can make the administration of your estate more complex upon your death or incapacity.
In estate planning these days, living trusts are a foundational document. As you are thinking about your estate plan, you should seriously consider executing one.
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