When you hear estate planning terms that sound similar to one another, it can cause confusion. Wills, living wills and living trusts are all useful documents to consider including in your estate plan, but they are not all the same.
Knowing the differences between these three similar-sounding documents can help you decide whether they are appropriate for your estate plan.
Other names for a will include a last will or a testamentary will. This is a document in which you detail the property you own and indicate where you want it to go after you die. A will also names an executor to be in charge of your estate following your death and a guardian for your minor children, if applicable.
A living trust is another way of distributing your property after you die. Upon your death, a trustee takes responsibility for managing the assets on behalf of the beneficiaries you designate, so-called because they receive benefits from the trust. You retain control over the assets until you die, hence the name “living” trust.
According to U.S. News and World Report, a living will is an advance directive that gives instructions about the type of medical treatment you want to receive if you lose your capacity to make decisions on your own behalf due to a health condition. Ideally, everyone over the age of 18 should have a living will, although many people do not think about it until they are older. It is especially helpful if you feel strongly that there are certain medical treatments that you would not want to receive if you were in a coma or otherwise unable to make your own health care decisions.
The main difference between a living will and the other two documents is that it has nothing to do with your property.