Wills And Trusts: What’s The Difference And Why Does It Matter?
We have heard several stories in which people failed to create an estate plan due to procrastination or avoidance. It’s time to change that thinking. But where do you start? A good first step is to seek guidance from an experienced estate planning attorney.
Gadi Zohar, Esq., in Palo Alto, California, focuses exclusively on estate planning and administration. Gadi Zohar will explain the differences between wills and trusts. Having an estate plan means you have made the critical decisions as to what will happen to your assets at death or incompetence, providing you and your loved ones with peace of mind.
How Trusts Can Help You
Because of California’s costly and burdensome probate process, we are known as a “trust heavy” state (i.e., most people with assets are best off with a living trust). Trusts are effective not only as a means of passing property at death but also for managing property for your comfort if you become incompetent – avoiding both, probate and conservatorships. Important facets of trusts include:
- A living trust allows for seamless management of your assets while you are living and competent, if you become incompetent and at your death.
- You manage your assets as your own trustee while you are living and competent.
- An appointed successor trustee oversees the trust if you become incompetent or at your death.
- In a revocable trust, you can change the trust terms if you want.
- The time-consuming and costly probate process – which you must partake in with a will – can be avoided.
- At your death, the living trust is generally administered privately. It is not a matter of public record like a will.
- There are many types of trusts, including special needs trusts that provide money for dependent adults.
You still need to create a will even though you may have a trust in place. This “pour-over” will is a backup document that simply tells the executor (discussed below) to transfer your property into the trust if you failed to do so while you were living. It can also be used to nominate a guardian for your minor children.
A Will Can Be A Crucial Safety Net
A will transfers property at death, but it has no significance if you become incompetent. In some cases (e.g., you have less than $150,000 in combined assets, no real property and no minor children), a will may be sufficient for the administration of your estate at death. Some of the key elements in wills include:
- Transferring assets to your trust if you didn’t transfer them to the trust while you were living
- The naming of guardians of your minor children if you have them
- In administering a will, your estate must go through the probate process in court in which the estate gets settled. This can take a significant amount of time (at least a year) and be costly
- The naming of an executor, whose duties include navigating the probate court system, giving notices to creditors and heirs as required by law, paying any bills, debts, or taxes owed by the estate, and distributing assets to the beneficiaries.
Find Out Why Estate Plans Are So Individualized
Estate plans vary from person to person, and no two situations are identical. It is very common for people to think their estate plan is simple, only to find out there are many things they hadn’t considered. That’s why it’s important to develop a plan that fits you. Gadi Zohar, Esq., in Palo Alto, California, will provide a step-by-step analysis of which plan is right for you. Contact us online or call 650-449-6671.