So most times when you establish a living trust, you will also sign what is called a pour over will at the same time. So just because you have a trust does not make you do not have a will. It is just that your will has a different purpose now. What your will does is it says everything that is in my individual name at my death, I leave to the trustee of the trust. So what it has the effect of doing is pouring over into your trust any accidents that have been accidentally left in your individual name during your lifetime which the trustee does not already hold title to. Now there are certain assets that you never transfer to your living trust and they would not be transfered to your trust by a will either. For example, retirement plans, which have their own beneficiary designations. Life insurance is often not held in trust because it, too, has its own beneficiary designation. Those would not transfer to your trust under your pour over will. But for example, if you have a house and your house is titled in your individual name at your death, then your will would operate to move it to the trust after you have passed away.

Facts and Myths about Wills and Living Trusts

Will

Facts:

•    Inexpensive: Comparing the services of estate planning lawyers can help you find a better and cost-effective option to make a will. 

•    Applies to All: A will is suitable for all adults regardless of age or health status. 

•    Can Have Multiple Wills: Making a will is not only limited to doing it once in a lifetime. You can revise your will anytime.

Myths:

•    Time-Consuming: Creating a will is not time-consuming because a dedicated estate planning lawyer can help you create a comprehensive will with full supervision to avoid stress and delays. 

•    Complicated: While you need to carefully think about how to distribute your assets in a comprehensive will, placing advanced provisions can be simple by finding the right options.

Living Trust 

Facts:

•    Avoids Probate: A living trust enables you to transfer your assets to a trust, which makes the person the legal owner of all your assets (probate). It is preferred by many people because the court plays no further role in the event the grantor has been incapacitated or has passed away. 

•    Protects Minor Children: The trust holds the money if your beneficiary is a minor and distributes the money once your children reach the right age or as stated in the legal agreement.

•    Ensures Privacy: Your personal data, including the names of inheritors or beneficiaries and asset value, won't be placed on public records.

Myths:

•    Saves You from Taxes: A living trust won't save a grantor from income or estate taxes. The grantor retains the absolute ownership of all assets. All revenues generated from the living trust are counted in the income of the grantor subject to income tax. When the grantor dies, the assets are transferred to the grantor's estate after all federal estate taxes are incurred. 

•    Inexpensive: A living trust is expensive to create and maintain, which sometimes overruns the cost of a will. Legal fees are involved in building and transferring assets, with lawyer's fees running up into the thousands of dollars.