In the event of your incapacitation or death, you would prefer to have your affairs in order. A comprehensive estate planning process ensures that your wishes regarding seamless management and distribution of your wealth among your rightful survivors are honored. It involves legal arrangements, like writing a will and establishing a trust. Determining if you need a will or a trust is a significant decision that begins with identifying their fundamental differences.
Breaking down the differences
A will is a signed and witnessed legal document that establishes the assets you own and how you want them distributed among your beneficiaries upon your demise. A designated executor conducts your wishes as expressed in the will.
Meanwhile, a trust is a legal instrument you create as a grantor who can transfer assets. Your designated trustee acts like a trust manager legally responsible for executing your wishes on behalf of your beneficiaries. A trust can either be revocable or irrevocable. A revocable trust retains your ownership, allowing you to make changes or cancellations at any time. In an irrevocable trust, you give up your ownership rights because it requires the beneficiaries’ permission before any changes.
Other significant factors display the differences between a will and a trust.
- Effective date: A will takes effect after your death, while a trust is effective immediately after its creation within your lifetime.
- Probate requirement: A will must have probate proceedings, while a trust takes you out of such hearings.
- Availability: Court filing for the probate hearing makes details about your will a public record, while a trust maintains your estate information’s privacy.
- Cost: A will may be costly due to the court fees necessary for probate hearings, while a trust’s initial preparation probably makes it just as expensive.
You can utilize either a will, a trust, or even both, depending on the conditions of your assets and relationships. But you die without a will, California’s intestacy laws will determine the distribution of your assets. The state’s priority list appoints your surviving spouse or legal domestic partner as the first choice to be your administrator or personal representative. They have a critical duty to act honestly while protecting records and maintaining constant communication with everyone involved.
Leaving a legacy
Determining the handling and distribution of your wealth seems like an uncomfortable discussion while you’re still alive and well. But comprehensive estate planning serves as a practical road map for you and your loved ones who might need guidance on how to proceed as you reach the end of your life. However, the process can quickly get chaotic, considering various stakeholders. You would want a reliable legal counsel to help you untangle the mess even when you are gone.