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A Will or a Trust or Both?

As you begin your estate planning process you might be wondering which documents you will need for your specific situation. There can be confusion as to whether you want a will or trust to distribute your assets, and in most cases that will depend on the size and complexity of your estate. In some cases, it may be best to have both a will and trust to make sure all of your assets are covered in the estate plan and avoid the probate process.

The Living Trust – A living trust is a flexible estate planning tool that allows you to manage and distribute your assets and can remain in effect after you die. Here are the basics:

  • A trust contains a current transfer of assets while you are alive, administered by a trustee.
  • You as the grantor of the trust, can also be trustee while you are alive.
  • If you are the trustee, you will want to have a backup trustee such as a trusted family member or professional fiduciary.
  • The trust will only govern the assets that are listed in the trust instrument.

The Will – A will differs from a trust because it does not transfer title of assets until after you die. It also will apply to all of your property that is not otherwise named in a trust or joint ownership. Here is how it works:

  • You make your will and list all beneficiaries.
  • You can make specific bequests or amounts to certain heirs, or just let your entire estate be distributed in equal shares.
  • It can be changed or amended at any time prior to death.
  • The will has to go through probate, which is a court process to make sure your wishes are followed.

Do I Need Both a Will and Trust? If you have a small estate under $150,000.00, no minor children, or no real property, you may be able to take advantage of California’s simplified probate process with a will. Otherwise, a trust is better to avoid probate fees and delays.

However, if you have a trust you should also have a will to make sure that any property not listed in the trust will be distributed how you wish. Otherwise, state statutes will determine who receives the property. Another strategy is to make a ‘pour over will’ which names your trust as the sole beneficiary and all property will automatically be placed in the trust.

Written by Andrea Shoup

Shoup Legal, A Professional Law Corporation can be reached at (951) 445-4114.

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