What's the Difference Between a Will and a Trust?
One of the most common questions as an estate planning practice is:
“What's the difference between a will and a trust?”
The short answer is that both can provide instructions for what happens to your assets when you die, but they work very differently.
What Is a Will?
A will is a legal document that provides instructions for what should happen after you die.
Among other things, a will can:
Say who should receive your property
Name the person you want to handle your estate
Nominate guardians for your minor children
But here's something many people don't realize:
Having a will doesn't necessarily keep your estate out of probate.
Your will tells people what you want to happen, but certain assets may still have to go through the California probate process before they can be distributed.
Probate is the court process used to handle certain assets after someone dies. In California, the probate court may oversee paying debts, identifying the people entitled to inherit, and transferring property to beneficiaries. Probate takes time (9 months to 2 years on average), involve court and attorney fees (a percentage of total estate), and part of a public record.
What Is a Living Trust?
A revocable living trust is created while you're alive.
You can transfer assets, such as your home, into the trust while continuing to own and control them.
Your trust can then provide instructions for:
Who manages your assets if you become incapacitated
Who takes over after you die
Who receives your assets
When and how your beneficiaries receive their inheritance
A properly funded living trust also allows assets in the trust to pass to your beneficiaries without going through probate.
What's the Biggest Difference Between a Will and a Trust?
Here's a simple way to think about it:
A will says what should happen after you die.
A living trust helps manage your assets while you're alive, if you become incapacitated, and after you die.
A trust can also provide much more detailed instructions about an inheritance.
For example, instead of simply saying: “Everything goes equally to my children.”
Your comprehensive trust can answer:
What if your children are still minors?
Who manages their inheritance?
Should they receive everything at 18?
Should they receive it at 25 or 30 instead?
What happens if a child is going through a divorce or has creditor problems?
What happens if one of your beneficiaries dies before you?
These are the types of questions that turn legal documents into an actual comprehensive estate plan.
Does a Living Trust Avoid Probate in California?
That is a primary goal of a trust but there's an important catch:
Your assets actually need to be connected to or transferred into the trust when appropriate.
This is called funding your trust.
For example, if you create a living trust but never transfer your California home into it, the trust may not accomplish what you expected for that property.
That's why at ARK Law Estate Planning, we don't believe estate planning should stop with preparing a trust document.
Creating the trust is one step. Properly funding it is another.
Do I Still Need a Will If I Have a Trust?
Often, yes.
A comprehensive estate plan commonly includes both a living trust and a will.
For someone with a trust, the will is often called a pour-over will. It works together with the trust as part of the overall estate plan.
For parents, a will is also important because it can be used to nominate guardians for minor children.
So the question isn't “Do I need a will OR a trust?”
A better question is: “What documents do I need to make sure my family is properly protected?”
Do I Need a Will or a Trust in California?
If you own a home in California, have minor children, want to avoid probate, or want more control over how your beneficiaries receive their inheritance, a living trust is what most people choose to have a part of their estate plan.
Looking for an Estate Planning Attorney in California?
ARK Law Estate Planning helps individuals and families throughout California create comprehensive estate plans designed around their families, assets, and wishes.
Our goal isn't simply to prepare documents. We help our clients understand their options, make important planning decisions, and properly fund their trusts when appropriate.
Schedule a complimentary consultation today!
