Living Will
Your health decisions at the end of your life are determined so that there is a record of them if you are unable to express them yourself. An alternate agent can be appointed to manage your assets if you are unable to do so. It becomes void upon your death, and your assets can be distributed according to your wishes after your death.
Living Trust
A living trust is a legal entity created to hold and manage your assets after they have been transferred to the trust. These funds are typically invested and spent for the benefit of the trust maker – the person who created the trust – and ultimately for their private beneficiaries. The living trust is managed by a trustee, who is usually the trust maker when the living trust is revocable. Different rules apply to irrevocable trusts.
Something Else to Consider
You can incorporate a living will into an advance medical directive. This legal document allows you to appoint someone else to make healthcare decisions on your behalf if you are unable to do so yourself, but an advance medical directive is not the same as a living will. It is a separate document.
Conclusion
Both the living will and living trust protect against mental incapacity. Your successor trustee will manage your trust if you reach a point where you cannot handle your financial affairs. A living will can do many of the same things concerning your healthcare. It expresses your wishes if the time comes when you cannot do so.
Contact an estate planning attorney to ensure that you have covered all aspects if you are unsure whether you need a living will, a revocable living trust, or both. You can pass your property to beneficiaries in many other ways, but a living will can clearly express your wishes at the end of life.
FAQs (Code)
Does a living will expire at any time?
A living will remains in effect until you take steps to revoke it. The best way to do this is to shred or destroy any copies of it. You should also communicate with anyone to whom you provided a copy to ensure they understand that it is no longer valid.
Are there any assets that should not be placed in a living trust?
Transferring certain retirement accounts to a living trust may require a withdrawal. This can lead to a 10% tax penalty, depending on your circumstances, so check with a tax professional or investment advisor first.
Source: https://www.thebalancemoney.com/living-will-vs-living-trust-3505198
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