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What’s Better for Me, a Will or a Trust?

You have likely worked hard for the money and assets you have and because of this you want to be in control of how those assets will be divided after your death. Although many people believe only the very wealthy need an estate plan, in fact, even those of modest means can benefit from having a comprehensive California estate plan. The strategy for your estate plan will depend heavily on your individual circumstances. Depending on the specifics of your assets and how you would like to leave them to beneficiaries, you may decide on a will, a trust, or both.

What is a Will?

A will—also known as a last will and testament, can be an important building block to any estate plan. A will carefully explains and clarifies the details of what you want to happen to your assets after you die. If you choose a will as the backbone of your estate plan, then your will provides the essential details of who will inherit, when they will inherit and how they will inherit. You will name an executor in your will (sometimes called a personal representative) who will be charged with settling your final affairs and taking your estate through the probate process. If you have minor children, having a will is essential, as this is the legal document which allows you to name a guardian for your children—a person you trust to raise your children to adulthood.

In the state of California, you must be at least 18 years of age to make a will and must have two witnesses to your signature on the will. Neither of the witnesses to your will can be a beneficiary, otherwise California law presumes a gift made to a will witness was made under duress. Notarization is not required in the state of California, and as long as your will is properly signed and witnessed; it does not have to be “proven” to the probate court (no self-proving affidavit is required). California does allow handwritten wills—also known as holographic wills—with no witnesses necessary when the entire will is written in the testator’s handwriting.

If you die intestate—that is, without a will or other estate planning document—California intestacy laws will determine how your property will be distributed, starting with your spouse and children, then moving to grandchildren, parents, siblings and even more distant relatives. If you have no living relatives by blood or by marriage, the state of California will take your property in the absence of a will or other estate planning documents. If you fail to name an executor, or you do not have a will when you die, the probate court will appoint someone to probate your estate. In the state of California, you can revoke or change your will at any time, by burning, destroying, canceling, tearing up or obliterating the will as a method of revoking the will or by making a new will which states the old will is being revoked.

What is a Trust?

A trust can do many of the same things a will does, however a trust cannot name a guardian for your children and a trust does not have to go through the probate process. You can have a revocable living trust or an irrevocable living trust—the first can be changed, the second cannot. You will probably be the trustee for the trust during your life, and you will name a successor trustee in the trust document who will take over handling of the trust after your death or in the event of your incapacitation. If you choose a trust for your primary estate planning document, you will transfer ownership of your assets into the trust.

Any asset which you fail to fund in your trust must be “caught” in a document known as a “pour-over will.” A pour-over will only determines who will be in charge of the assets, which were not funded in your trust as well as the powers that person will have. A pour-over will, like a regular will, can name a guardian for your minor children. A properly funded living trust can allow your beneficiaries to avoid probate, can help you plan for the possibility of your own incapacitation, can prevent your financial affairs from becoming public record, can be used for any size estate, and can control what happens to your property after your death. A living trust can be more expensive to set up than a will, because a trust must be managed after its creation.

Will or Living Trust?

As noted, a living trust involves more upfront expenses as well as a bit more effort, however having a living trust can help your beneficiaries avoid probate, which can be both expensive and time-consuming. Your beneficiaries will receive their inheritances soon after your death when a trust is used, while if you only have a will, probate could take from six months to two years. A trust goes into effect as soon as it is created and funded, while a will only goes into effect upon your death. A trust can be used to distribute property prior to your death, upon your death, or at a time after your death.

A trust has two types of beneficiaries—those who receive assets or income from the trust during their life, and another set that receives anything left over after the death of the first set of beneficiaries. A trust can minimize estate taxes, if estate taxes are a consideration, while a will cannot. A will encompasses property which is only in your name at the time of your death but does not cover property held in a trust or in joint tenancy, while a trust covers any property which has been transferred to the trust.

Gullotta Law Group Can Help You Determine the Type of Estate Plan Right For You

In the end, you will need to discuss your goals with an estate planning attorney from the Gullotta Law Group to determine whether a will, a trust, or both will suit your needs. Both wills and trusts have their advantages and disadvantages, and many times a person may benefit from having both as a part of their estate plan. To make decisions regarding your estate plan, contact the Gullotta Law Group today.

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