As you get ready to create estate plans and make your end-of-life care instructions, you may find yourself wondering if you really need a living will or trust. Although they sound alike, they serve two different purposes.
Both documents allow you to leave explicit details on how you want your medical affairs, estate and finances to be managed. They also provide protection if you become mentally incapacitated. To avoid making mistakes that can result in the mismanagement of your end-of-life plans and estate, take some time to learn some key differences between living wills and trusts.
Living trusts protect your finances and assets
A living trust allows you to avoid probate court and protect your privacy. When creating a living trust, you include instructions on what you want to happen to your assets after you die. You can also include instructions about your preferences for the handling of your financial affairs if you become seriously ill or incapacitated and unable to manage them yourself. For a living trust to be valid, you must fund it by transferring your assets to it. You must name beneficiaries and trustees and retitle your assets.
Living wills protect your wishes regarding medical care
As you get older, the chances of you falling severely ill and becoming mentally incapacitated increase. Your family and loved ones may not know, understand or choose to follow your wishes regarding your end-of-life care. A living allows you to inform them and your medical providers about treatments you want and do not want. It also lets you specify if you want to be resuscitated or treated with life-sustaining or life-ending care.
The instructions you include in a living will and trust override your loved ones’ wishes. They become effective immediately when you cannot speak for yourself. It is important for you to consider drafting these documents now while you are in good health to cover all your bases and prevent complications should your circumstances change.