A car, Connecticut home or other assets may be accounted for in your estate plan by creating a will or a living trust. Using these documents may also ensure that your dependents are properly cared for. However, despite helping you accomplish many of the same goals, these estate planning tools do so in very different ways.
What to know about a will
Wills are designed to account for assets that are held inside of your estate at the time of your death. They do not take effect until after you pass away, which means that they are ineffective at helping you manage your affairs if you become incapacitated. Therefore, it may be necessary to add a financial power of attorney or a medical directive to your estate plan. Your will may also be used to appoint a guardian for your minor child in the event that you pass unexpectedly.
What to know about a living trust
Trust documents take effect as soon as they are executed, which means that they may be more appropriate for managing your affairs while still alive. An alternate trustee will look after your assets in the event that you are unable to do so on your own. Assets titled in a trust’s name are held outside of your estate, and the terms of your living trust are not entered into the public record. Therefore, a trust may be ideal if you are looking to avoid probate or otherwise protect your family’s privacy.
Understanding the differences between a will and a living trust may make it easier to craft an estate plan that truly meets your needs. Ideally, you’ll periodically review these documents and any others that make up your estate plan to ensure that they still meet your needs as your circumstances change.