Revocable Living Trust, Living Will, Will - What's the difference?
Many people get the terminology mixed up when discussing estate planning, so I thought I’d break down some of the commonly confused terms: revocable living trusts, living wills, and wills. Each of these is a distinctly different thing with its own purpose.
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Revocable Living Trust
A revocable living trust is an entity that a person creates in order to hold property so that their family can avoid the court processes called probate (if they die) and conservatorship (if they are incapacitated). A revocable living trust is active during a person’s lifetime and it is revocable or changeable by the person who set it up at any time before they become incapacitated or die. If a person wants their estate to be handled quickly, affordably, and privately in a lawyer’s office, they will often set up a Revocable Living Trust plan. The person executes a Trust Agreement, transfers their property to the trust, redesignates beneficiaries as the trust, and outlines their wishes for their trustee to follow if they are incapacitated or die.
A living will is a healthcare document that outlines healthcare wishes. It takes effect if you are incapacitated and unable to make healthcare decisions for yourself. In Oregon, our document is called an Advance Directive, but some people might use a living will in addition to the Advance Directive. Other states have a healthcare power of attorney or healthcare proxy, and some states use these in addition to a living will.
A will is a document that tells a probate court what you want done with your assets if you die. It only takes effect when you die, so you cannot use a will to plan for your assets if you are incapacitated. A will names your personal representative (called an executor in some states) and spells out who your beneficiaries are and who gets what.
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To your family's health + happiness.
~Candice N. Aiston
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Candice N. Aiston is an Legal Planning Attorney for Estates + Businesses in the Portland, Oregon area. She helps people to prepare for a lifetime of security, prosperity, and guidance. If you would like to receive her free reports, please visit http://aistonlaw.com/ to sign up. Follow her Facebook page for daily planning tips: https://www.facebook.com/aistonlaw/.