Do you know what would happen to your assets or minor children if you passed away? For many, this question seems untimely, as they believe they will have time later to make those decisions. The truth is that it is never too early to prepare for the future.
Whether you have $100,000 or $1 million in assets, you can benefit from a Will or Trust. Perhaps you have written a Will but wonder if you need a Trust—or vice versa.
In this article, members of our estate planning attorney team at Anthoor Law Group in Fremont, California, talk about key distinctions between a Will and Trust to help you understand the difference and determine the ideal plan for your situation.
Wills and Trusts protect your property, assets, and heirs in the event of your death, but they are not the same things. Each works a bit differently.
A Will (aka Last Will and Testament) is a legal document that determines how the court will distribute your property and other assets upon your death. The Will names beneficiaries and may include the amount or percentage of your assets that you intend each heir to receive.
You can also include other specifications in a Will, including funeral and burial instructions, guardianship of minor children, and other important final decisions.
You will usually nominate an executor of your estate in your Will. The executor is the person you desire to be legally responsible for carrying out your desires and distributing your assets. If you do not identify an executor in your Will, the court will appoint one to serve as an advocate for your wishes.
If you have a Will, the probate court will appoint your executor and supervise administration and distribution of your estate.
Determining if your Will is valid is one of the first steps of the probate process, so be sure to seek guidance from a professional to ensure that your Will follows California guidelines.
Unlike a Will, a Trust is a more complex process. Trusts create a legal entity distinct and separate from your personal identity. You can establish a Trust to fund and manage your assets in the name of the Trust to avoid the probate process.
With a Trust, you are the settlor or trustee while you are living. You can designate a trustee to succeed you upon your death or incapacitation. You can also name your beneficiaries and outline who will take possession of and manage properties and other assets. For example, a Trust may disallow the sale of a property that you would prefer to keep within the family.
There are various types of Trusts, and which one is right for you will depend on your situation. If you create a Revocable Living Trust, probate court is not required to distribute assets. Other types of trusts include Charitable Trusts to pay charities and Special Needs Trusts to assist individuals with disabilities.
To learn more about the different types of trusts you can create, speak with an estate planning attorney.
This question is a bit misleading because even if most of your assets are held in a Trust, a Will can still benefit you by protecting assets that may be outside of it. Everyone should have a Will that outlines their wishes and nominates a trusted individual as executor. A Will is essential for nominating guardians for your minor children.
Whether or not a Trust will benefit you depends on a variety of factors. Generally, Trusts offer more benefits to people with high-value estates or complicated assets or families. If you have an average estate value with straightforward assets, spending the money to create and manage a Trust may not make sense; the probate court process may be cheaper.
However, if you have many high-value assets, and want to set specific amounts for beneficiaries, or want to keep your estate away from the public eye, you may decide on a Trust. Since Revocable Living Trusts avoid probate court, you can ensure privacy for your beneficiaries. Probate matters are public record, so if you own a business or have other privacy concerns, you may opt for a Trust.
If you are still unsure whether a Will or Trust is right for you, seek advice from an estate planning professional.
In the Fremont, California, area, contact our team at Anthoor Law Group for any assistance with Wills, Trusts, and other aspects of estate planning. We will guide you through the estate planning process.
In addition to speaking English, we have staff fluent in Spanish, Tamil, Hindi, Malayalam, Telugu, and Punjabi. Call our estate planning law team today at (510) 794-2887 for a complimentary initial consultation.
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