Differences Between a Living Trust and a Will in Arizona

Estate plans contain a variety of legal documents meant to benefit you during your life and after your passing. Living trusts and living wills are two common tools, but many individuals don’t know the differences between them. Working with an experienced estate planning attorney can help you understand how wills, trusts, and other estate planning instruments can protect your assets, preserve your wealth, and provide for your heirs.

At Pennington Law, PLLC, we provide comprehensive estate planning services to Arizona residents. If you’re ready to plan your estate or update your existing plan, contact us today for a free consultation. Our estate planning attorneys will explain the distinctions between a living trust vs. a will and whether they are well-suited for your situation.

What Is a Living Trust in Arizona?

A living trust in Arizona, also known as a revocable trust, is a legal tool for managing assets during the creator’s lifetime and distributing them to their beneficiaries upon their death. As the person who puts assets into the trust, you are known as the settlor or grantor. The person managing the trust is the trustee, and the individuals who receive assets through your trust upon your death are the beneficiaries. Living trusts are popular estate planning tools because they allow individuals to modify the terms of the trust while they are still alive and protect their assets after their death.

One of the most essential roles of a trust is to avoid probate. In addition, the assets held in the trust are private and cannot be taken to settle debts after your passing. Trusts also give the settlor more control over who receives certain assets and when.

What Is a Living Will in Arizona?

A living will, also known as a healthcare directive, is a legal document that outlines your wishes regarding medical treatment if you become incapacitated. If you cannot make medical decisions yourself, your living will can dictate the types of treatments you want to receive or avoid.

Often, living wills are combined with a healthcare power of attorney (POA). A healthcare POA grants a trusted individual the authority to make medical decisions on your behalf if you cannot. By combining a living will and healthcare POA, you can clarify your wishes regarding medical treatment and appoint an agent to ensure others respect your preferences.

Main Differences Between a Living Trust and a Living Will

Despite their similar names, living trusts and living wills are very different. Some of the most significant differences are the purpose of the documents and when they become activated.

The purpose of a living trust is to manage and distribute your assets. Living trusts have a financial focus, playing a role both during your life and after your death. By contrast, a living will details your medical preferences if incapacity strikes. They focus solely on healthcare decisions and don’t appoint someone to make decisions on your behalf unless paired with a healthcare power of attorney.

Living trusts also activate immediately upon creation. You can immediately put assets into the trust and modify it as you see fit. Living wills only kick in when a doctor determines you are incapacitated due to illness or injury. They are inactive while you can make medical decisions yourself and terminate upon your death.

The simplest way to think about these documents is that a living trust controls what happens to your assets, while a living will determines what happens to your body.

Pros, Cons, and Costs in Arizona

Like all estate planning tools, living trusts and living wills have advantages and disadvantages.

The pros of a living trust in Arizona include:

  • Probate avoidance
  • Privacy
  • Flexibility
  • Allows you to specify asset distribution methods and timelines

Cons:

  • Costs more than a basic will
  • Require ongoing maintenance to ensure it meets your goals
  • No tax benefits
  • A countable asset when calculating Medicaid eligibility for long-term care

The pros of a living will include:

  • Provide clear instructions for your end-of-life care
  • Relatively inexpensive
  • Reduce the emotional burden on your family when making difficult decisions

The cons of a living will in Arizona are:

  • Only related to medical care, no financial protections
  • May not cover every medical scenario
  • May need regular updates if your condition or values change

Drafting a living trust or living will can cost anywhere from hundreds to thousands of dollars depending on the size and complexity of your estate. An experienced estate planning attorney can help you understand your costs based on your situation.

Living Trust vs. Living Will: Which One Is Right for You?

When planning your estate, you don’t have to choose between a living trust and a living will. Most estate plans contain both of these documents since they cover entirely different things. Living trusts and living wills complement one another, as a living trust manages your assets, and a living will outlines your medical wishes.

It’s important to note that living trusts and living wills are hardly the only Arizona estate planning tools to consider. Your lawyer can discuss other components that go into a comprehensive estate plan, including:

  • Last will and testament
  • Trusts
  • Tax planning
  • Powers of attorney
  • Advance directives
  • Medicaid planning
  • Tax planning
  • Retirement planning
  • Gifting
  • Long-term care insurance
  • Beneficiary designations

An experienced estate planning attorney can work to determine what strategies can best serve your goals and needs. Your individual circumstances, including your age, health, family dynamics, and asset complexity, can impact how these legal tools should be used.

Contact Our Arizona Estate Planning Attorneys Today

If you need help creating a living trust or living will in Arizona, contact Pennington Law, PLLC for a free consultation with an experienced Arizona estate planning attorney. Our firm can walk you through the estate planning process and make personalized recommendations based on your unique situation, needs, and wishes. We can also draft your estate planning documents so they are legally binding and avoid common pitfalls.

Ready to get started? Contact us today for a free consultation with a member of our estate planning team.