Living Will vs. Will vs. Living Trust: What's the Difference

04/11/2014

I've met my fair share of people who get confused over the difference between a living will, a living trust and a will.  The confusion is understandable.  The names of these documents are very similiar and the names can be easily confused, especially if you don't deal with estate planning regularly. 

A living will (sometimes referred to as a health care declaration) is a document that expresses your intentions regarding medical treatment if you are suffering from a terminal injury or illness.  A living will does not dispose of your property at death.  In fact, a living will is no longer effective after death since medical decisions would no longer be necessary. 

Contrast a living will with a will (sometimes referred to technically as a Last Will and Testament).  A Last Will and Testament does two main things.  First, it states where your property goes in the event of your death.  Second, a Last Will and Testament can appoint guardians for minor children.  A Last Will and Testament does not really do anything while you are alive.

A Living Trust (sometimes referred to as a Revocable Living Trust) generally covers three phases of your life: (1) While you're alive and well, (2) If you're alive but not so well, and (3) After you die.  With a Living Trust, you take your assets (while you are alive) and transfer them to the trust.  Generally, while you are alive and well, the assets are used for your benefit (and you control the trust).  If you are alive, but not so well, your trust will appoint others to administer the assets in the trust for your benefit.  If you die, the Living Trust (like a Last Will and Testament) states where your property goes.  The main difference between living property at death by a Living Trust as opposed to a Last Will and Testament is that property left by a trust avoids probate.