Estate Planning – Wills and Trusts

Is estate planning the same as a will?

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Is there more to writing a Will for Estate Planning?

Trusts and Wills have the same essential function: passing your property to your heirs after your death. Nonetheless, the differences in how the two documents operate should be carefully considered before choosing between them. If you are trying to decide how to distribute your assets or care for your children after you die and need legal assistance, you should hire your lawyer.

Is estate planning the same as a will?

What Is a Will: A will is a legal document detailing how you want your assets to be distributed after your death. It can also lay out your wishes regarding how your children will care for after your death. Wills also names an executor who’s in charge of carrying out the actions in your will.

What is a Trust: A trust offers several advantages over a will. First, a trust enables your heirs to avoid probate, whereas wills must go through probate. Probate is how a court transfers ownership of your assets to the people designated in your will. For example, the probate court would supervise the sale of your home and the distribution of the proceeds per the will’s named beneficiaries. There can be significant costs and delays associated with probate, and if you die and your heirs need access to money immediately, probate will make that unlikely.

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Generally, if you die without a will, trust, or other provision for distributing your money and property, that money and property will be distributed according to California law. This is a complicated process, but essentially the state will determine who gets the property based on their relationship with you.

However, some property, such as joint bank accounts, insurance proceeds, 401Ks, and other financial investments, will be given to the person you designated as the beneficiary. Usually, the financial company or insurance company allows you to select the beneficiary when you open the account and will allow you to change it at any time. Check with the company. If it’s a joint account, if you and someone own the account together, the other account holder usually gets the balance when you die. Also, in California, some things you own, such as a house, may be registered with your county as “community property.” If that’s the case, your surviving spouse becomes the sole owner upon your death.

To establish a trust, you first create it and then designate your various assets (retirement accounts, bank accounts, homes, cars, life insurance, etc.) to be transferred to the trust upon your death. Alternatively, you could transfer assets to the trust while you live to facilitate managing the assets if you become disabled or incapacitated. Either way, after your death, the trustee you’ve chosen will gather your assets and distribute them (or the proceeds of their sale) to the beneficiaries named in your trust. There is no waiting period involved in trust administration, which means that your heirs have much faster access to the funds you’ve left them.

You can control the distribution of your property after death through a will. But, even though your will can provide information on how to distribute your assets, your beneficiaries or a named executor will still need to go through a court process called probate to distribute your property. You can also use a will to make arrangements for the care of your minor children.

Another advantage of a trust is that it gives you more control over the distribution of your assets than a will does. With a will, if the person to inherit property is a minor, the probate court must name a conservator to manage the money until the minor reaches 18. In addition, the probate court supervises all distributions of money for that minor’s health, education, maintenance, and support, such as living expenses, school tuition, and orthodontia. The court can also exercise its judgment to disallow any expenditure. But with a trust, you can appoint a trustee who will make all spending decisions for minors according to your wishes. You can specify the age at which a given beneficiary can take control of their inheritance. You can even create a lifetime trust for your heirs, which can provide some creditor protection and other benefits to safeguard their heritage.

Finally, you can arrange for the distribution of your property through a living trust. Some books and guides teach you how to do this yourself, but you should be very careful and make sure that these publications have been customized to comply with California law. Whether or not to create trust is a personal decision, and you should consider whether you need to hire a lawyer or other estate planning professional. Notwithstanding, not every person offering to set up a trust is trustworthy. Please see our Living Trust Mills page for more information.

Third, unlike the terms of a will, the terms of a trust are private. Probate proceedings and documents are public records, meaning that anyone can read the terms of your will or the circumstances of its administration. But because a trust is a contract, the distribution and terms of your estate are private, and the details are not accessible by the public, including the nature and amount of your property or the identity of your beneficiaries.

When properly created and funded, a trust is usually an easier, faster, and less expensive way to pass your assets to your beneficiaries, especially if minor children are involved.