Wills & Living Trusts
A living will, despite its name, isn’t at all like the wills that people use to leave property at their death. A living will, also called a directive to physicians or advance directive, is a document that lets people state their wishes for end-of-life medical care, in case they become unable to communicate their decisions. It has no power after death.
If you’re helping someone with their estate planning (or doing your own), don’t overlook a living will. It can give invaluable guidance to family members and healthcare professionals if a person can’t express his or her wishes. Without a document expressing those wishes, family members and doctors are left to guess what a seriously ill person would prefer in terms of treatment. They may end up in painful disputes, which occasionally make it all the way to a courtroom.
Living wills are often used with a document called a durable power of attorney (DPOA) for healthcare. In some states, in fact, the two documents are combined into one. A DPOA appoints someone to carry out the wishes about end-of-life treatment that are written down in a living will or medical directive. The person named is called the “agent,” “healthcare proxy,” or “attorney-in-fact” of the person who makes the DPOA.
The most common kind of living trust, the simple revocable living trust, is essentially a substitute for a will—people create it while they’re alive, to leave property at their death. The main reason to use a living trust instead of a will is probate avoidance. Unlike property left through a will, property left through a trust doesn’t need to go through probate before it can be transferred to the people who inherit it. So using a trust saves surviving family members the money, time, and effort that would otherwise be spent on probate.
A living trust has other advantages as well. It’s private (unlike a will, which becomes a matter of public record when it’s filed with the local court after death), and it can take effect during life if the person who made it becomes incapacitated and needs help managing trust property.