Both a will and a living trust are estate instruments that can leave property to your named beneficiaries. They both are important in allowing you to decide how your property should be distributed. There are, however, a number of differences between them:
A will is subject to probate. It can name guardians for your minor children and allows you to disinherit people if you wish. It also contains your wishes on how you wish to be interred or cremated. It can be changed or modified at any time during your lifetime. A will, however, has no effect until you pass away and a probate proceeding confirms its validity.
Wills have no value for managing your property while you are still alive. When you do pass, an executor named in your will is responsible for administering your estate and is personally liable to anyone who alleges harm by the executor’s failure to not do the job properly. If your named executor is no longer alive or does not wish to conduct the duties, the court will name one.
If you become incapacitated by illness, age or injury, a court will have to appoint a conservator or guardian to manage your assets. Even a power of attorney may have some limitations. Also, if you have real estate in another state, there has to be a separate probate proceeding. Any of these can cost thousands of dollars in court costs and legal fees.
Further, you may have to go to the state where the will was created for the probate. A probate proceeding is always public so that there is a public record of your property and to whom your assets are passed.
A regular living trust is created while you are still alive and takes effect upon its creation. In this instrument, you are passing ownership of certain assets to the trust. You name a trustee, who can be you, as well as a successor to become trustee on your incapacity or death. You typically retain all rights to manage the trust and the property held in trust. You can add or take out property, sell it or use it in any way you wish.
An important component of a trust is that your named trustee can take over management of the trust property if you become incapacitated. Your trust can even list the criteria used to determine your incapacity.
When you as grantor of the trust passes away, the trust determines who gets the benefit of the trust by distributing its assets in any manner you wish without court.
If you have any questions about your living trust or will options in Pasadena, CA, please contact Christopher B. Johnson, an experienced estate planning attorney.