One of the most common questions families ask is: “Do I need a will, a living trust, or both?”
The answer depends on your family, the property you own, and what you want your plan to accomplish. Although wills and living trusts both help pass property to the people you choose, they work differently.
What Does a Will Do?
A will allows you to:
- Name the people who should inherit your property.
- Nominate someone to administer your estate.
- Nominate guardians for your minor children.
- Provide instructions for property that does not pass through another method.
A common misunderstanding is that having a will keeps an estate out of probate. It usually does not. A will generally provides instructions to the probate court about how your estate should be handled.
Probate is the court-supervised process for transferring property after someone dies. It can take time, create expenses, and make certain information about the estate part of the public record.
What Does a Living Trust Do?
A revocable living trust is created during your lifetime. You can usually remain in control of the trust property and change the trust while you are living and have capacity.
A properly prepared and funded living trust may:
- Allow trust property to pass without a full probate proceeding.
- Provide instructions for managing your property if you become incapacitated.
- Keep the administration of your property more private.
- Control when and how your beneficiaries receive their inheritance.
- Protect an inheritance for young or financially inexperienced beneficiaries.
The word “funded” is important. Creating and signing a trust does not automatically place your property inside it. Real estate and other appropriate assets must be properly transferred or coordinated with the trust.
An unfunded trust may not provide the probate-avoidance benefits the family expected.
Do California Families Need Both?
Many comprehensive California estate plans include both a living trust and a pour-over will.
The living trust contains the detailed instructions for managing and distributing trust property. The pour-over will acts as a backup for certain property that was not transferred into the trust. For parents, the will is also commonly used to nominate guardians for minor children.
A complete plan may also include:
- A durable financial power of attorney.
- An advance health care directive.
- A HIPAA authorization.
- Guardian nominations.
- Final disposition instructions.
- Updated beneficiary designations.
- Instructions for caring for family pets.
Which Choice Is Right for You?
A living trust may be particularly helpful if you own California real estate, have minor children, want to plan for incapacity, or want greater control over an inheritance.
A will-based plan may be appropriate in some simpler circumstances. However, the right answer cannot be determined by looking only at your age or account balances. How your assets are titled, your family relationships, your beneficiaries, and your long-term goals all matter.
Estate planning is not simply about selecting a document. It is about creating a coordinated plan that will work when your family needs it.
Family First Legal Services, P.C. helps California families understand their options and create plans designed around the people they love. To begin, Schedule a Peace of Mind Planning Session (consultation) or schedule a 15 minute call by clicking either link below.
This article provides general educational information about California estate planning and is not legal advice. Reading it does not create an attorney-client relationship. Every family’s circumstances are different, and laws may change.