A living will and a living trust are two very different legal documents that serve similar purposes. A living will provides for management of health care decisions should you become incapacitated. A living trust provides for management of your property under the same situation.
Advanced Medical Directive
In a living will, you outline your wishes about whether you would like your life prolonged by machines, feeding tubes or other artificial means after a devastating accident in which no hope exists of a reasonable recovery. You may also establish a health-care proxy (another adult to make decisions about your care for you). The health-care proxy document (also called a durable medical power of attorney) and living will together are called an advance medical directive.
Advance medical directives are written while you are well and of sound mind to prepare for a time when you may be incapacitated. They are valid throughout the United States, although an advance medical directive drawn up in one state may not necessarily be valid in another. Before a living will can guide decision making, two physicians need to certify that you are unable to make medical decisions and that you're in the medical condition specified in the state's living will law, such as terminal illness. Before a health care proxy can go into effect, a physician must certify that you're unable to make you own medical decisions. Some states, such as California, require this to be your primary care physician. If you regain the ability to make your own decisions, the power of the health care proxy ends.
Trusts may be revocable, or irrevocable. Revocable trusts allow you to change your mind about who will manage your assets as long as you are mentally competent, whereas irrevocable ones do not. In a living trust, you name yourself as a trustee, while naming a successor if you become incapacitated. They can be written so as also to serve as a power of attorney, meaning that they would give a successor trustee the right to make all the decisions you normally would.
Living trusts also include the name of the beneficiary or beneficiaries who will inherit when you die. Assets that you want to protect in a trust should be retitled in the name of the trust to allow your heirs to inherit without having to wait for the estate to go through probate. Clauses can help reduce federal and state taxes.
- AARP: 10 Things You Should Know About Living Trusts
- CNN Money Ultimate Guide to Retirement: What Kinds of Trusts Are There
- CNN Money Ultimate Guide to Retirement: What is a Living Will
- Axa Equitable: What is the difference between a living will and a living trust?
- Caring Today: Power of Attorney- Is it Right for You?
- Caring Connections: What are Advance Directives?
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