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Knowing the difference between these two planning tools is the key to a successful estate plan
Q: What’s the difference between a will and a living trust?
— Marisa
A: It’s important to understand the difference between living trusts and wills if you hope to do any type of successful estate planning. First, the similarities. Living trusts and wills are both legal documents written to deal with property and both are important estate planning tools that can sometimes even be used together.
Living trusts appoint trustees to manage property. Trustees control property while you are alive. They can even manage trust assets if you are incapable and can distribute trust property when you die. In this way living trusts can be will substitutes.
Wills appoint executors who manage and distribute property when someone dies. But until someone dies, executors have no power to control property. So what if anyone becomes incapable of managing things themselves? They would need an attorney set up as a power of attorney to manage their property. This power of attorney is done in addition to a will.
Those are the basic differences but you need to know more.
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I live in Canada we own a bungalow car truck and furniture nothing major my husband has a pension plan I have an rrsp through work we have a 36 year old son what the easiest way to go for him and the cheapest way to go is it to make will or put everything in a trust we are kind of confused
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.