Estate administration is not easy. Several estate planning tools may seem alike, but some are more appropriate for a specific circumstance than others. What this article will focus on are wills and trusts, and what they can and cannot do.
- What a will & trust can both do in your estate plan
Last wills and testaments can help you describe the accounts and estate property (in your name) and specify who gets what. This generally excludes any account or property that has a payable on death beneficiary (or transfer-on-death designation).
Both will and trusts will allow you to name beneficiaries or who you want to receive specific accounts and property and ensure sufficient asset protection. A trust (and a will, although less commonly) may be drafted with protective sub-trusts. This means that beneficiaries receive some enjoyment but accounts and property are protected from creditors of your beneficiaries (which may include bankruptcy trustees, divorcing spouses, or car accident claimants).
Note, however, that trusts would require you ‘funding’, or you transferring property into the trust. This means that ownership of your accounts and property is transferred from your name to that of the trust. Trust documents cover only accounts and property in the name of the trust. Seek legal advice from a competent Calabasas estate planning attorney to clarify what this means.
According to all relevant statutes of estate law, both a will and revocable living trust can be amended or revised when a circumstance or your intentions change. That is, as so long as there is no incapacity to make decisions on the changes and that the legal document in question is not an irrevocable trust (which cannot be changed without legal action).
- What wills can do that revocable living trusts cannot
Will allow you to appoint a personal representative or executor of an estate. He or she will take responsibility for your affairs when you pass away. This may include dealing with matters in the probate court, administering accounts and property not held in trust, paying what is owed to a creditor, and distributing what remains to your heirs or surviving spouse and family members. Now if there are no more assets of the estate that are in your name (and all are held in a trust), this may not be applicable.
As long as there is the testamentary capacity required by state law, a last will and testament can be used in naming guardians for a minor child. Revocable living trusts are generally not used for these.
- What revocable living trusts can that wills cannot
Challenging a trust in the courthouse is more difficult than contesting a will since trust documents are not for public view. Remember that a will is a public legal document while trusts are not. By setting up a trust and appointing a trustee instead, your loved ones can maintain their privacy after death.
Trusts are also extremely useful for avoiding probate issues. The probate estate of the one who died can involve tedious and costly proceedings. Accounts and property in a revocable living trust need not go through the probate process at the time of death. A Calabasas estate planning attorney can give legal advice on how you can avoid probate procedures and paperwork.
Since a last will and testament is only effective when you die, it is useless in avoiding guardianship and conservatorship proceedings during your lifetime. A revocable living trust is also beneficial in naming a spouse, child, grandchild, or any loved one as trustee and manage your estate property that has been transferred to the trust account.
If you need an attorney from a law firm specializing in these issues, give us a call. Our Calabasas estate planning attorney at Moschetti Law can assist with your estate planning concerns.