The Differences Between Wills And Trusts

The differences between wills and trusts are dramatic in terms of probate avoidance. Probate is where a California court supervises the distribution of your estate once you pass away. Unfortunately, due to budget cutbacks related to California's recent economic woes, the probate process can easily take two years on average and can cost between 6-8% of your estate's value. For these reasons, many Californians seek to avoid it.

A majority of people come to me without any idea of how a will actually works. They think that in California, having a will will prevent your estate from going into probate, when actually, the opposite is true! By definition, having a will guarantees that your estate will enter probate. The purpose of a will is to to allow a California judge to supervise the administration of your estate and make sure that your will's executor distributes your estate according to the wishes that you put on paper. It tells the probate judge, "upon passing you are to make sure that my executor, X, distributes my estate to my beneficiary, Y." X must now distribute your estate to Y with judicial oversight.

Now compare this to a living trust. A trust is a legal creation that will avoid probate. People die, but legal entities can live forever- just look at the US Constitution! You create a trust during your lifetime and assign all of your valuable assets through its various legal documentation capabilities. The idea is that because Trusts continue indefinitely, if your assets are held in a trust, they will continue being owned by it even after you pass away, and hence avoid probate. During your life you are the manager of the trust (the initial trustee), meaning that if this is a revocable trust, you can go about adding, subtracting, and changing the trust and its property however you wish. Once you pass away, your named successor trustee takes control, and must distribute the trust property according to your trust's terms, and this bypasses probate. The state of California will only involve itself if the beneficiary sues the successor trustee for failing to properly administer the trust.

While it is generally best to utilize a trust to avoid the costly and time-consuming process of probate, there are some situations where it might be better to create and implement a last will and testament that goes through probate court. Everybody is unique and an attorney should review your particular family situation so to help you decide what is best for you. The bottomline is that there are significant and meaningful differences between wills and trusts, these are differences you should consult with a skilled estate planning attorney to determine whether you should seek probate or avoid it based on your specific needs.

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