Navigating Estate Planning: Comparing Last Wills and Living Trusts

Understanding the differences between a Living Trust and a Last Testament or Will is essential when it comes to estate planning. Although they have different functions, both texts have significant goals. Here, we'll examine the pros and possible drawbacks of each to assist you in making a wise choice.

Last Will and Testament

Advantages:

Simplicity: Compared to a Living Trust, a Last Will and Testament is usually less expensive up front and easier to draft.

Control: Gives you the option to choose guardians for small children and to decide how your assets will be divided after your death.

Flexibility: Simple to adjust to new situations or desires.

Legal Clarity: Makes sure your desires are formally acknowledged by giving the probate court precise instructions to follow.

Disadvantages:

Probate Is NOT Avoided: Wills require probate in and of themselves. This implies that the courts will supervise the allocation of your assets, which will be exceedingly costly and time-consuming. Furthermore, the court ultimately has the authority to oversee or even change the distribution parameters.

No Privacy: Because probate is a public procedure, information about your assets and estate, as well as the actions taken to divide your assets throughout the probate process, will be available to the public.

Delayed obtain: Because of the probate procedure, beneficiaries typically have to wait one to two years to obtain their inheritance.

Restricted Control Over Asset Management: Following your death, the executor is in charge of handling your assets in accordance with your will, but with less latitude than a trust affords.

Expenses: Drafting a Last Will and Testament has a minimal up-front expense, but the probate procedure is quite expensive. A portion of the estate's gross worth is used to calculate the costs of probate. For illustration purposes, let's say you own an ordinary home in Orange County, where the typical property worth is currently about $1,100,000. In this case, the automatic and inevitable costs of probate surpass $50,000 due to court fees, attorney fees, and executor's commissions.

Living Trust

Advantages:

1. Avoids Probate: When assets are deposited into a living trust, the probate procedure is avoided, enabling beneficiaries to get their assets much more quickly and for a lot less money.

2. Privacy: A Living Trust keeps your estate matters secret because it is not a publicly accessible document like a will.

3. Greater Immediate Access: Compared to probate, a trust's trustee has far greater latitude to conclude administration considerably faster and make early disbursements as necessary. It usually takes beneficiaries just a few months to get their inheritance.

4. Greater Control over Asset Management: A trust gives you greater flexibility over the distribution of your assets, including the option to delay payouts for beneficiaries who are younger.

5. Continual Management: If necessary, a Living Trust enables asset management to continue even after your passing. Stated differently, in the event of your incapacitation, the successor trustee will be able to administer the trust without the need for judicial involvement.

6. Tax Planning: Estate planning offers a great deal of freedom when it comes to anticipating and reducing different kinds of taxes, including the death tax.

Disadvantages:

1. Expense and Complexity: Although the initial expense of creating a living trust is far, far less than that of going through probate, it is often more difficult and expensive than creating a will. To facilitate efficient administration, a Living Trust often comes with a number of ancillary legal papers as part of a complete estate plan. 

2. Maintenance: To make sure that all assets are correctly titled in the trust's name, having a Living Trust necessitates occasional continuous maintenance. In the event that assets are not moved into the trust, probate may still be required.

Which Should You Choose?

In California, a Living Trust is commonly advised for most estates and situations. Ultimately, though, the decision between a Living Trust and a Last Will and Testament will rely on your unique situation and objectives. Here are a few considerations:

• A Last Will and Testament may be adequate if you prefer simplicity and don't care about probate.

• If you have a complicated estate, would rather avoid probate, or need secrecy, a living trust can be more advantageous.

• If incapacity worries you, a Living Trust offers a way to handle your affairs outside of the judicial system.

A thorough estate plan may be created by combining the two papers. To guarantee that any assets not covered by the trust are nevertheless transferred in accordance with your preferences, you may, for example, have a "pour-over" will in addition to a living trust to handle the majority of your assets.

Get in touch with us for a free consultation.

It might be difficult to comprehend the complexities of estate planning, but you don't have to do it alone. We at Goodman Estate Law are here to assist you in reaching the greatest choice for your particular circumstance. Attorney Brett Goodman can be reached for a no-cost consultation. You can reach him via email at brett@goodmanestatelaw.com or by phone at (949) 768-1491.

Allow us to assist you in safeguarding your legacy and making sure your loved ones are safe.