So you’ve finally make the decision to plan your estate and assets, but now you’re faced with trying to decide which tool, or instrument, is best suited for your particular needs. There are more than a dozen different estate planning tools, each of which has its own unique purpose. From last wills and living wills to living trusts and revocable trusts, trying to distinguish between the different tools can be challenging to say the least.
Last Will and Testament
One of the most common estate planning tools is a last will and testament. This is essentially a document in which the creator (known as a testator) names at least one other person to manage his or her property and assets, while also explaining how their estate should be managed in the event of their death. If you’re a parent who owns a home, for instance, you may want to create a last will and testament to ensure your home, as well as other assets, are evenly distributed among your children.
There are several different types of last will and testaments, some of which include the following:
- Serviceman’s will
- Unsolemn will
- Will in solemn form
Not to be confused with a last will, a living will differs from its counterpart by focusing strictly on medical decisions in the event the testator is mentally and/or physically incapacitated. The testator of a living will explains his or her medical decisions within this document, offering peace of mind that he or she will be cared for according to their wishes. This may include critical decisions like whether or not to remain on life support when there’s no sign of brain activity; the transfusion of blood; and surgeries which have a low rate of success when used to treat or prevent or a particular condition.
Living wills do not cover money or assets, as they are intended strictly for medical decisions. To specify who will receive your property in the event of your death, you’ll need to use a last will and testament or some other estate planning tool.
A third tool that’s commonly used when planning one’s estate is a living trust. Also known as an inter vivos or revocable trust, it is a written, legally binding document in which the testator places his or her assets for the duration of their lifetime. When the testator passes, the assets described in the living trust are transferred to the beneficiaries through a representative known as a successor trustee.
You might be wondering why anyone would choose to plan their estate using a living trust as opposed to a last will and testament. Well, there are several key benefits to using a living trust, one of which is the simple fact that it avoids probate court. With a last will and testament, the testator’s estate must go through a local probate court, which can be time-consuming and stressful for the parties involved. Because living trusts avoid probate court, beneficiaries can receive their portion of the estate faster, usually in just a couple weeks time.
Another benefit of using a living trust to plan your estate instead of a last will and testament is privacy. Last will and testaments are placed on display for the world to see, as U.S. laws require them to be made public. A living trust preserves the cloak of anonymity by keeping the details hidden.
A revocable trust lives up to its namesake in the sense that it can be revoked at any given time during the testator’s life. This is in stark contrast to an irrevocable trust, which cannot be revoked once created. The obvious benefit of using a revocable trust to plan your estate is the ability it offers to remove beneficiaries, add new beneficiaries, or modify the assets and terms set forth with the existing beneficiary. Keep in mind that most living trusts are considered to be revocable trusts (e.g. revocable living trust).
Estate Planning and Notarization: What You Should Know
You might be wondering whether or not any of the aforementioned estate planning tools require notarization. While many types of legally binding documents do require notarization, a last will and testament generally does not.
“Most states require that two witnesses subscribe to the execution of a prepared will. Since the testator is deceased, he cannot verify his signature nor testify as to his intent, so the witnesses testify in his place,” explained the legal experts at LegalZoom.com.
With that said, most states require the testator to sign his or her will in front of at least one, sometimes two, witnesses (note: a notary public may act as a witness). LegalZoom goes on to say that regardless of state law, it’s a smart idea to have your estate planning documents notarized because it adds authenticity and fraud protection. So whether you are using a last will and testament, living will, trust, or any other estate planning tool, consider having it notarized for an added barrier of protection against disputes.
Commonly Used Estate Planning Tools