Hi there. My name is Miranda Dressler and I am an Associate Attorney with the Law Offices of Bridget Mackay in Petaluma, California and we focus on estate planning and elder law.
This blog is the first in a series of blogs I’m going to be doing called Back to Basics.
Both a will and a trust are estate planning devices. However, there are important differences and consequences that result from whether you use one or the other as your main estate planning document. So, both a will and a trust are legal documents in which you can dictate who will inherit your assets at your death. What they will receive and when and how they will receive it. Both of these documents also appoint a legal representative who will handle the administration of your estate after you pass away. This includes identifying your assets, paying any taxes or creditors and then distributing your assets to your beneficiaries as you have directed in the document.
One of the major differences between a will and a trust is that a will has no legal effect while you are still alive. A will only goes into effect after you have passed away. For example, if you become incapacitated and can no longer handle your financial or legal affairs, someone will have to go into court to ask permission to be put in charge of your affairs. And, as you know any time someone has to go in and out of court it means a lot of expense and a lot of delay.
A trust on the other hand takes effect as soon as it is created. If you become incapacitated, a legal representative you have named will be able to immediately step in to take over management of your assets and your affairs for your benefit. Without having to go to court to ask permission to do so.
Another major difference between a trust and a will is that with a will, after your death your state will be required to go through a court process called probate. And, basically probate is the process where your assets get distributed to the beneficiaries you have named. However, probate is extremely expensive and time consuming. You can expect that in total, the probate process will cost approximately three to five percent of the total gross value of the assets in your estate.
If you have any further questions about any of the things I’ve discussed today, you should contact a qualified estate planning attorney in your area. Thank you and see you next time.