“What is the difference between a will, a living will and a living trust? I am an elderly man with some assets and no living relatives.  I wants to give all my belongings to a close friend, when I pass away.  In case I become disabled and can no longer care for myself, what legal document should I have in place now?”

You should have at least a will, advance health care directive, and durable power of attorney. If your estate is over $150,000 you should consider a trust.

What is the difference between the three?

  1. A will transfers assets on your death. Wills cover any assets that are neither in trust nor in a direct-beneficiary account such as an IRA or Life Insurance. A will is also the place to name guardians for minor children.
  2. A living trust is created and funded during your life and avoids probate for estates over $150,000. Trusts only cover assets that are placed in trust. Advantages of a living trust are: (1) assets in a living trust avoid probate; (2) a living trust is more flexible in payout – you can pay out assets over time, rather than all at once; (3) living trust will automatically have a successor take over management of your trust assets if you become incapacitated.
  3. A living will is a health care document that has been replaced in California by the advance health care directive (the AHCD is a combination of the old living will and a medical power of attorney).

In summary the will (or a will and living trust) will distribute assets to your friend. The AHCD names an agent to make your health care decisions if you no longer can. The durable power of attorney names an agent to make your financial decisions if you no longer can.

Remember, you should always have will, even if you have a trust. This is because not all assets end up put in trust. For more details, contact an estate planning attorney you trust.