WILLS VS. TRUSTS:
WHICH ONE IS RIGHT FOR YOU?
According to just about every poll and survey taken, fewer than half of all Americans have created a last will and testament. The range of those who do usually comes in between 30 and 40 percent. When those without a will are asked why, they often say they don’t know how, or they don’t have enough assets to leave to anyone. Fortunately, creating a will is easily accomplished by setting up an appointment with an estate planning attorney. As for not having enough assets, that is rarely the case. Working adults accumulate assets throughout their lifetime, whether it’s real property like cars and homes, cash assets like bank accounts or investments, or even family heirlooms of value to your loved ones.
A will designates who gets what when you die. It can also be used to express your funeral and burial preferences and to name a guardian for your minor children. A will, however, has one major drawback: it must be administered through probate court, and that process can be expensive and lengthy.
Another option to designate your beneficiaries is to use a living trust. A trust does not have to undergo probate—but it cannot be used to name a guardian or convey your end-of-life options. A combination of a will and a living trust is often the most ideal option.
If you’re anywhere in the Redlands, California area and looking to begin your estate planning by creating a will, a trust, or both, contact The Elder & Disability Law Firm, APC. The firm’s estate planning attorneys have more than 30 years of experience in helping people plan for the welfare of their loved ones when they’re gone. An attorney would be glad to sit with you, discuss your unique situation and your desires for the care of your loved ones, and then create a will, trust, or both to give you and your loved ones peace of mind going forward.
The Elder & Disability Law Firm, APC is located in Redlands but proudly serves clients in neighboring communities throughout Southern California, including Palm Springs, Riverside, and Rancho Cucamonga.
WHAT IS A WILL?
A will—also known as a simple will or testamentary will—is a document that takes effect only upon your death. Not only does a will designate who gets what of your assets, but it also names a personal representative to present your will to the Superior Court in the county of your residence for probate proceedings. The court will then name your personal representative to be the executor of your estate.
A will can also be used for other purposes. A will can name a guardian for your minor children, provide instructions for your funeral and burial, and also designate how your taxes should be handled upon your death. If you become incapacitated and cannot administer your estate or handle your finances, however, a will is of little or no use. For incapacitation or the inability to manage your own affairs, you will need to create a living will and a power of attorney naming someone else to handle your affairs for you.
A living will—in which you express your medical treatment options should you become incapacitated—is one of several forms of wills. In California, a living will is also known as an advance health care directive. Another type of will is called a joint or mirror will, in which spouses or partners leave everything to the surviving spouse or partner, and then to the children when both are gone. There are a variety of other kinds of wills as well.
WHAT IS A TRUST?
Trusts can be revocable or irrevocable. A trust is a document that, unlike a will, takes effect immediately. You place all your assets in the trust and name a trustee to oversee them. You remain the trustee until an event triggers the authority of the successor trustee you have named. In a living trust—one that is used like a will to designate beneficiaries—the trustee takes charge of your assets when you become incapacitated and/or when you pass away.
An irrevocable trust means you place your assets in the trust and assign them immediately to a trustee. You no longer have any control over the assets. An irrevocable trust is generally used as legal protection against creditors and lawsuits and for tax purposes.
A living trust, which can be an alternative to a will or a complement to one, is a valuable estate planning tool for a variety of reasons. First of all, it avoids probate court, and avoiding court proceedings also means the results are private and the public need never know who got what or any other details.
Another benefit of a living trust is that it allows the trustee to take charge of your assets should you become incapacitated. You may also need to assign a power of attorney to the trustee—to be triggered by your incapacitation—to ensure the trustee has authority over everything. A living will is also advised to cover your medical treatment preferences should you be unable to voice your treatment choices for yourself because of incapacitation.
Keep in mind that trusts cannot name guardians for your children, contain instructions for your burial, or address issues regarding taxes.
WILLS VS. TRUSTS: WHICH ONE IS BETTER?
A will has functions over and above a living trust, but it also entails a lengthy and expensive public process known as probate. A will is generally less expensive to prepare, but a living trust takes effect immediately and has built-in protections against incapacitation. Often, it’s important to have both a will and a trust.
The best recourse is to consult with an estate planning attorney and discuss your unique circumstances and your needs—and your loved ones’ needs—going forward. The least favorable option is to have neither will nor trust, thus forcing your loved ones to go through probate proceedings and have the court decide who the beneficiaries are and which assets they are entitled to.
CONTACT THE ELDER & DISABILITY LAW FIRM, APC
You’re never too young or too old to begin estate planning, but you can be too late. Should you become incapacitated through some unforeseen circumstance, you will no longer be able to create either a will or a trust. Your best option is to get started today. Contact the estate planning attorneys at The Elder & Disability Law Firm, APC to begin preparing for the future now. The firm serves clients in and around Redlands, California, and in neighboring communities throughout Southern California like Rancho Cucamonga, Palm Springs, and Riverside.