What is the difference between simple wills, living trusts, and living wills?
When you are making an estate plan, you will likely hear lots of terms like simple wills, living wills, and living trusts. It is easy to become confused about the terminology, but it is important to understand the key differences between these estate planning tools. Simple wills are a common tool that allow you to provide some basic instructions to your executor, who is the person chosen by you in your will to wind up the affairs of your estate. Simple wills also make it possible to provide instructions on who your property will transfer to, although the assets transferred will usually have to go through probate and you will have little or no control over what happens to them after death.
Living trusts also allow for assets to transfer, but only the assets held in the trust. Living trusts also provide help with incapacity planning, as trust assets can be controlled by a backup trustee if something happens to you. Assets held in living trusts transfer through trust administration, not probate, which means that they can go to new owners more quickly. However, they still count for estate tax purposes.
Finally, living wills are used to provide instructions on medical care you want in an emergency. They do not facilitate the transfer of assets at all. Learn more here about the differences between simple wills, living trusts, and living wills.