Though the names may be very similar, a living will and a living trust are not the same, nor do they serve the same purpose. A living trust is a type of trust that holds and manages your assets while you are still alive, then distributes those assets to your beneficiaries upon your death. A living will, on the other hand, is a term commonly used to describe a legal document that provides your instructions regarding the course of medical treatment you want followed if you become unable to express those intentions later on.
What is a living trust?
A trust is essentially a fiduciary agreement between the person making the trust (trustor) and the trustee. That means the agreement is based on confidence and trust. This agreement gives the trustee the power to manage the trust assets and distribute those assets to the named beneficiaries as identified in the trust agreement. A “living trust” is a specific type of trust meant to become effective while you are living, as opposed to not going into effect until after your death which is how a will operates. One of the main purposes of a living trust is avoiding the court-supervised probate process, which can take a long time and cost a lot of money while allowing you to retain control over that property during your lifetime.
Some advantages of a living trust
There are many important advantages to including a living trust in your estate plan. One advantage is the potential for avoiding the probate process. In the long run, living trusts can save time and money, as well as help to avoid potential difficulties when the time comes to distribute assets to your beneficiaries or heirs. There are also many useful tax advantages associated with living trusts. Another advantage to a living trust can be the ability to help reduce the amount of estate taxes imposed upon your death. Privacy is yet another benefit of a living trust because the terms of the trust agreement remain private, unlike a will which is subject to the public nature of probate.
What is a living will?
A basic will is a legal document that gives you the ability to determine how you want your assets to be distributed to your heirs after your death. A living will is quite different, however. In California, the legal document that acts like a living will is known as an advance health care directive. This document specifies the course of medical treatment, if any, you want followed if you ever become unable to communicate those wishes for yourself. An example is a written statement that you do not want to be placed on life support if you become brain dead.
Types of living wills
There are generally three types of living wills. The first type provides instructions to your health care providers regarding the types of medical treatment you would want to receive in particular medical situations. The second type of living will allows you to name someone else to be your “proxy” and have the power to make decisions regarding medical treatment on your behalf. This type of living will does not necessarily provide specific instructions. Finally, you can have a living will that basically does both, That is how California’s advance health care directive operates.
The benefits of a living will
The most important benefit of having a living will is that you have the ability to make the important decisions about your future health care needs now. That way, when you are no longer capable of making those decisions or you cannot explain your desires regarding medical treatment to your physician or family, your wishes will still be carried out. Another major benefit of a living will is that it relieves your family of the stress and burden of anticipating what you would want, at a time when emotions are already running high.
Do I have to forfeit my right to all medical care?
A common misconception is that, when you create a living will, you have effectively rejected any and all types of medical treatment. Worry not! You will not be abandoned by your health care providers simply because you have executed a living will. A living will only has an impact on the measures your physician determines are useless or unnecessary, based on your personal health care directives. Your health care providers are required to continue to attend to your needs and comfort while you are in their care.
If you have questions regarding living trusts, or any other estate planning needs, please contact the Northern California Center for Estate Planning and Elder Law, either online or by calling us at (916) 437-3500.