How do you compare a living trust vs. a will in California? Wills and trusts both allow you to dispose of your property to beneficiaries. Beyond that, there are few similarities.
What Is a Will?
A last will and testament is a legal document you create that specifies how your property will be distributed after you die, among other things. A will should normally contain the following:
- The identity of an executor who will manage your estate from the time you die until the probate process is complete;
- The identity of a guardian for your minor children, if you have any; and
- The names of your beneficiaries and what you want to leave to whom.
You might add other items as well. You might, for example, use your will to create a testamentary trust, add a property to it, establish its terms and name a trustee to manage it.
If you have minor children living at home, it is critical that you name a guardian for them in your will. You might believe that you will easily live until your children grow up, and you might be right. Nevertheless, you wouldn’t want your untimely death to put the guardianship issue in the hands of a probate judge. After all, the probate judge likely has no idea who would be the best person to entrust with the care of your children.
In California, you can completely disinherit your children if you wish, even if they are still minors when you die. Disinheriting a child does not eliminate child support obligations, however.
What Is a Trust?
A trust is a legal vehicle that allows you to appoint a trustee (including yourself) to manage assets on behalf of a beneficiary or beneficiaries. There are two main types of trusts: living trusts and testamentary trusts. One advantage of a trust is its flexibility. Instead of being forced to dispose of estate assets by the time probate closes, a trustee can continue managing trust assets for many years.
What is the difference between a will and a living trust? To create a living trust, the settlor or trustor (the person who creates the trust) must put property into the trust (usually by changing the title), name a trustee to manage the assets, and name at least one beneficiary. You can serve as the trustee of your trust. A living trust is revocable unless you expressly declare it irrevocable.
Your living trust will become effective as soon as you sign it, and it will normally become irrevocable as soon as you die. Your trust assets will not go through probate. Your successor trustee can continue managing the trust assets as usual, with no interruption caused by probate proceedings.
A last will and testament can include a testamentary trust. A testamentary trust is a trust that isn’t created until you die. The main advantage of a testamentary trust over a simple will is its flexibility. Ordinarily, probate assets must be distributed to estate beneficiaries by the time probate ends, typically about a year after the testator’s death. A testamentary trust, which sets out the terms of the trust, can distribute assets to beneficiaries for an indefinite period, just as a living trust can.
Main Differences Between Wills and Trusts
Following are some of the main differences between a living trust vs. a will:
- A living trust, unlike a will, can keep your assets out of probate proceedings.
- A trustor names a trustee to manage the assets of the trust indefinitely. Wills name an executor to manage the assets of the probate estate only until probate closes.
- Trusts tend to be more expensive and more complex to maintain than wills.
- In a trust, information about your estate stays private. In probate, information about your estate is made public.
- A Declaration of Trust, not a will, establishes the terms of the distribution of trust assets. The trustee is bound to observe these terms. A Declaration of Trust contained within a will creates a testamentary trust.
- If you establish a trust and then die, the only interruption to the trust will be the accession of a successor trustee if you were the trustee at the time you died. The administration of trust assets will not be otherwise affected by your death.
- Unlike the probate of a will, your estate will not have to pay a probate attorney or court fees in response to your death.
- A living will vs. living trust: A “living will” is not what most people mean when they refer to a will. Instead, a living will set forth your wishes for end-of-life medical treatment. Do you want to be kept alive on machines, for example? Never confuse a living will and a trust.
The two main reasons people create trusts are to avoid probate and take advantage of their flexibility.
Dying Without a Will
If you die without a will or with a will that the probate court declares invalid, you will die “intestate,” and California will distribute your property by state intestate succession law. The court will distribute your assets to your relatives based on the closeness of their kinship with you. It will also appoint guardians for your minor children without your input. Please consider that if you are wealthy, an estate plan might protect your beneficiaries from estate tax liability.
Do I Need a Will or Living Trust?
The California probate lawyers at Barr & Young have drafted hundreds of wills and trusts. We know how to prepare an estate plan that is tailor-made to suit your needs and preferences. Contact us online, or by telephone at (925) 660-7544. We represent clients from all over the Bay Area, including Berkeley, Danville, Livermore, Oakland, Pleasant Hill, Pleasanton, Richmond, San Francisco, or Walnut Creek.