What is the difference between a living will and a living trust? Are they the same? Are they even close to being the same? And most importantly, why should you care one way or another?
First, I’ll provide a basic definition of the living will and the living trust. That will tell you immediately what the differences are between them. And I’ll take it a step further and provide information on when you should/could have each and why.
An Ohio living will is a written statement detailing a person’s preference to receive life-sustaining treatments or die a natural death when the declarant is in a terminal and incurable state where the only recourse is pro-longing an unavoidable death. In other words, if death is imminent or you are brain dead after an auto accident and there are decisions to be made regarding your treatment. Maybe you don’t want to be placed on life-support, or perhaps you do. Your living will would provide that direction to the health care professionals.
The term living trust, according to the American Bar Association (ABA), “is generally used to describe a trust that you create during your lifetime. A living trust can help you manage your assets or protect you should you become ill, disabled, or simply challenged by the symptoms of aging.” The ABA points out that these trusts do not help you avoid estate tax but help you avoid the probate of your assets.
Clearly, a living will is not the same as a living trust. But while we’re here, let’s discuss who should have a living will. The answer is EVERY ADULT. Age is not a factor. Anyone can be in an accident or have a sudden serious health issue. ALL adults should have a living will for two solid reasons.
Two Reasons to Have a Living Will
1. A living will removes the guesswork.
Consider your family, be it a spouse, a sibling, a parent, or an adult child. Do you want them to be burdened, should the time come, with telling medical professionals whether to keep you on life support or not? Even if you have mentioned it in passing, having it clearly communicated in a legal document gets them “off the hook” and assures the caregivers of your wishes. Remember, doctors take an oath to do everything they can to maintain life – they need permission to do otherwise. Without a living will doctors won’t likely listen to input from family members or other, which brings us to reason two.
2 A living will can save your loved ones’ inheritance.
Let’s say you decide not to execute a living will and are comatose in a horrible accident. The doctors determine you can and will live, but only with life support measures – machines, round-the-clock medical staff, etc. It could go on like that for weeks, months, or years before you finally die. This is probably not what you would want for your end-of-life, but it could happen if you didn’t clarify your wishes beforehand. And all your hard-earned assets, an inheritance you had wanted to bestow on your loved ones, are exhausted, keeping you alive. No one wins in that scenario.
Living Trusts – Who Should Have One and Why?
I recommend living trusts to many clients to avoid probate – which no one wants to go through if they can avoid it. But they offer other benefits as well. According to the ABA, “a living trust can help you manage your assets or protect you should you become ill, disabled or simply challenged by the symptoms of aging. A “living trust” is legally in existence during your lifetime, has a trustee who currently serves, and owns property which (generally) you have transferred to it during your lifetime. While you are living, the trustee (who may be you, although a co-trustee might also be named along with you) is generally responsible for managing the property as you direct for your benefit. Upon your death, the trustee is generally directed to either distribute the trust property to your beneficiaries or to continue to hold it and manage it for the benefit of your beneficiaries. Like a will, a living trust can provide for the distribution of property upon your death. Unlike a will, it can also (a) provide you with a vehicle for managing your property during your lifetime and (b) authorize the trustee to manage the property and use it for your benefit (and your family) if you should become incapacitated, thereby avoiding the appointment of a guardian for that purpose.”
I hope for those of you who weren’t clear on the difference between a living will and a living trust that this has helped. They are both important legal instruments, though, as you see, they are very different ones. I would be happy to talk with you about either or both. Please call me at 513-399-7526 or visit my website www.davidlefton.com to schedule a consultation.