Estate Planning 101: Living Trust versus a Will in California

Most people believe that a Will is all that is needed in order to pass on the assets in their estate. However, what most people fail to realize is that a Will is not going to be a sufficient California Estate Planning tool. That is because a Will comes up short in several key respects when compared to a Living Trust (also known as a Revocable Trust or Inter Vivos Trust).

Six reasons a Living Trust is superior to a Will in California.

1. A Trust avoids probate whereas a Will still goes through probate court.

A Will is simply a road map for the Probate Court to follow. A Will does not avoid probate; it simply directs the Probate Court judge on how you want your assets distributed upon your death. The judge will follow your wishes in your Will but your estate will still be on the hook for all probate related fees (such as attorney fees, CPA fees, appraisal fees, etc…). The total fees for the probate of an estate in California can be as high as 5-6% of the total value of the estate.

However, a Living Trust, set up by an experienced California Trust Attorney, avoids the entire probate process. That means the bulk of the assets will pass without any fees to the intended beneficiaries. It also means that there is no court involvement. Therefore, the value of a Living Trust is that it avoids probate fees and probate court. The small cost involved in setting up a properly funded Living Trust compared to the total savings a Trust provides by avoiding Probate is substantial.

2. A Trust can hold beneficiary assets whereas assets pass at age 18 with a Will

A Trust can be designed so that the assets pass to beneficiaries at a desired age. For example, a Trust can have language in it that gives 25% to a child upon completion of college, another 25% upon reaching age 25, with the remaining 50% at age 30. This allows a beneficiary to receive their inheritance in small chunks instead of in a bulk sum. Perhaps the beneficiary will have blown through the initial 25% and will be more disciplined in how they spend the next 25%.

However, with a Will, the beneficiary receives everything at age 18. That means a financially inexperienced teenager will receive their entire portion of the estate at 18. This can cause a lot of problems, including the beneficiary blowing through their entire inheritance.

3. California Trust Administration vs. California Probate

A typical California Trust Administration can take around three to nine months. That is assuming the Trust was created by an experienced California Trust Lawyer (some trust administrations can take a lot longer depending on the quality of the trust).

A typical California Probate can take anywhere from nine to eighteen months. Some more complicated probates can take years.

The bottom line is that the beneficiaries will receive their assets much quicker via a Trust than a Will.

4. A Living Trust is private whereas a Will is public

A Will is open to the public. In fact, notice of the decedent’s passing must be given to every beneficiary named in the Will and to every beneficiary who would have received had the deceased died intestate (without a Will). Further, anyone can access the probate court documents. There is absolutely no privacy with a California Probate.

A Trust is completely private. Notice of the decedent’s passing is given only to the heirs of the Living Trust. There is no court supervision, no court interaction and no public disclosure.

5. A Living Trust is harder to contest than a Will

Since a Will is open to the public and since notice is given to all named beneficiaries and to every beneficiary who would have received had the deceased died intestate, there is a much greater chance for a Contest by any potential heir who was left out of the Will.

However, due to the private nature of a Trust, there are very few parties involved. Therefore, there is less likelihood that anyone will Contest the Living Trust.

It is highly beneficial to avoid a California Will or Trust Contest because of the high cost associated with a Contest. Often, the cost of defending the Will or Trust Contest comes straight out of the assets of the estate, depleting the estate’s assets.

6. A Trust avoids court involvement at incapacity

In California, if a person becomes incapacitated, typically a member of the family petitions the Probate Court for a Conservatorship. This applies whether the incapacitated person has a Will or not. Then the Court decides who the appropriate Conservator will be.

A properly created Living Trust will list a Successor Trustee (as well as one or two backups). The Successor Trustee will take over for the Trustor upon the Trustor’s incapacity. There is no court involvement and the Trustor gets to choose the person and not the court.

One final note: a Will is still necessary when creating an estate plan. The Trust will hold all of the assets in the estate. However, every good Trust needs a “Pour Over Will” to grab any assets outside of the Trust and “pour” the assets back into the Living Trust. An experienced California estate planning lawyer will almost always recommend a Will to compliment a Living Trust.

In summary, the small price involved in setting up a California Revocable Trust far outweighs the time and money saved by avoiding probate. For questions on the above content or for any other legal advice dealing with California Living Trusts, an experienced North County San Diego will and trust attorney can help. Please contact the Law Offices of Jack B. Friedell today.

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