Creating an estate plan with a trust or will can make sure your wishes are followed and your family is taken care of after your death. There are many estate planning tools you can use to protect your assets and limit your tax liabilities. The two most common estate planning tools are a living trust or will. Read on to learn more about whether a trust or will is best for you.
Living Trust Overview
When considering whether you need a living trust or will, you first need to understand the function of each document. A living trust is a legal instrument that allows you to hold title to property for another person (including yourself) referred to as a beneficiary. The trust beneficiary can receive property from the trust while living or upon your death. You can appoint yourself, a loved one, a friend, a lawyer or an institution to serve as the trustee. The trust will allow you to appoint a successor trustee upon your death. A trust will also allow you to do the following:
- Plan for your incapacity
- Control what happens to your real and personal property upon your death
- Keep your financial affairs private and out of probate
A living trust must be actively managed after it is created. This is not difficult to do. You merely want to make sure all of your assets are contained in the trust. As you buy or sell assets, just make sure your trust is up-to-date and has been properly funded. A living trust is useless unless it is funded.
Difference Between a Trust or Will
One of the key differences between a trust or will is that a will is subject to probate while a trust is not. This means the court will oversee the administration of the will and make sure property is distributed as directed therein. On the other hand, a trust covers property that has been transferred to the trust and avoids probate.
When considering whether you should have a trust or will, keep in mind that every estate plan should, at least, have a last will and testament. A will can address certain issues (such as child guardianship) that a trust cannot. A will is easier to create and amend. When comparing a trust or will, a trust allows your heirs to skip probate. It also allows you to keep your financial affairs private upon your death. Though a trust or will can help you carry out similar goals, a trust allows you to do certain things a will cannot. Under most circumstances, and particularly if the estate is worth over $166,250, most people should create a trust and a last will and testament. This brochure published by the California State Bar offers a great overview of estate planning options in California.
Contact A People’s Choice for more information about creating a trust or will to make sure your estate is distributed to the people you want it to. Whether you need a trust or will, we can help you draft the estate planning documents you need to make sure a smooth transfer of property ownership upon your death.
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