You may be wondering whether to use a will or trust in passing along your assets.

What are the significant differences between wills and trusts that can save you time, money and headaches?

A trust is a group of assets held for the benefit of a third party called a beneficiary. A trustee oversees the trust’s disposition to the beneficiary. You can create a trust by establishing one, most commonly, while you are still alive — a living trust. The property in a trust remains in the trust until some specified event occurs — your death or the beneficiary reaching a certain age.

When you create a trust, you are the settlor; if you create a living trust, you can also be the trustee.

TRUST ADVANTAGES

• Using a living trust allows you to pass your property to your heirs without going through probate, which means faster distribution, especially in California due to busy probate courts.
• A trust maintains the privacy of your estate since it is not part of the probate court’s public filings and proceedings.
• If you have property in multiple states, a trust typically passes the assets without additional proceedings.
• Trust documents are effective immediately, so you can include things like end-of-life directives and who should act as your conservator if you’re incapacitated.
• A trust is more efficient than a will; after the settlor passes away, the trustee may immediately begin to act, execute the trust and dispose of the trust assets as set forth in the trust.
• A trust gives you control over how each beneficiary receives trust assets.
• You can set up a trust for specific purposes — such as to pay for a child’s education, provide for your beloved pets or to provide donations to a charitable organization.

TRUST DISADVANTAGES 

• The biggest difficulty with trusts is getting them set up. Trusts generally have higher preparation costs than do wills and require you to re-title your assets in the name of the trust, which takes time and money. If you don’t re-title your assets, those assets won’t pass through the trust and instead will go through probate.
• Trusts don’t automatically offer special estate tax benefits or creditor protection. Your attorney needs to include appropriate tax and creditor provisions so that your trust can provide maximum protection.

WILLS: PROS AND CONS

A will is a legally binding declaration by a person called the testator that stipulates that after your death, the estate will distribute assets in a specific way.

BENEFITS OF WILLS

• A will is low cost; once you’ve signed it and executed it, you don’t need to do anything else unless you want to make changes in the future.

DISADVANTAGES OF WILLS

• Wills involve probate court – which means time, money and statutory fees. Many times, the court process can be a long, drawn-out battle.
• Wills are usually public after you die, so everyone will know how you left your estate.
• You may need to go through ancillary probate proceedings in other states if you have property in multiple states.

Many different types of trusts and wills are available. Which one you choose will depend on your particular circumstances and tax status. Consult with Antonyan Miranda to prepare your estate plan. We will be happy to explain how trusts can help fulfill your long-term goals.