Developing an estate plan that suits your financial situation is important if you intend on leaving your children or other loved ones with assets or other financial benefits. Often, estate planning, or at least writing out a will and last testament, comes to mind once you purchase your first home or get married.

It is ultimately up to you to decide if a will or a trust would be better for your family after you pass.

Living trust vs. a will

There are benefits to both living trusts and wills, and depending on the complexity of your estate and assets, one may benefit your situation and family more than the other.

Will

A will allows you to lay out all your assets into one document and explain how you would like them distributed to your beneficiaries. Unfortunately, the law requires that any assets left in your name and those not set up to pass immediately to your spouse or someone else go through probate. This can be a very costly and time-consuming court process for your family.

Living trust

A living trust is an entity you create and place your assets into while you are alive. This takes them out of your name so that when you pass, anything within the trust is not subject to probate. Another benefit to trusts is that if you unexpectedly become incapacitated and unable to make decisions, you can leave instructions on how you would like your trustee and named beneficiaries to handle your estate.

Setting up a living trust in the correct way can also help you avoid federal estate taxes if your assets are worth more than $5 million (Georgia does not have an estate tax at the state level). You and your lawyer must carefully draft these documents with Georgia laws in mind.

Some people opt to create both documents to ensure that they have not left out any details and so they can make their wishes as clear as possible. Use a trust to avoid probate and possibly save on taxes, and a will gives you a place to name a guardian for minor children or children with special needs.