30th Oct 2013
Wills or living trusts? What is the better estate planning document? If you ask me, as a living trust attorney from Orange County, both documents have their benefits. Living trusts have become popular nowadays because of the ease in which assets can be transferred from the trust to your beneficiaries.
But first things first.
Having a will or a living trust providedthese have been validly executed and are updated to reflect your current personal and estate circumstances is good. By “validly executed,” I mean that the documents have passed legal standards (e.g., properly notarized, must have witnesses, the affiant must have prepared the document with a sound mind and was not under duress, etc.) so as to easily prevail over challenges. An estate planning document that is updated reflects your current state of affairs. (For example, be sure that all the beneficiaries stated in your document are still alive.)
On the other hand, having none of these should give you pause for thought. If you were to pass away today and you do not have any of these, then the state government will be the one to decide who gets what part of your estate.
In both a Will and a Living Trust, you essentially designate your beneficiaries and what part of your estate will go to them as well as give other instructions regarding your final wishes. Thus, when you pass away, parts of your estate will be transferred to the designated beneficiary. There will be no (or minimal) quarrels among putative heirs since there is an explicit document that mandates the procedure.
In a Living Trust, the estate owner creates a Trust wherein the assets of the estate owner (known as the Trustor) will be transferred to the Trust. The Trust has a distinct legal personality from the Trustor. Thus when the Trustor passes away, the Trustee will oversee the transfer of assets to the beneficiaries.
The assets named in the Trust will not have to go through probate. This feature of a Living Trust makes it attractive to people staring an estate plan. There are some features of a Living Trust which you may not particularly relish. For one, a Living Trust needs constant paper work and updating. Every time you acquire new property or assets, you transfer property to the Trust. If the property is not included in the Trust when you die, that property goes into probate.
Moreover, when you choose your Living Trust as your primary estate planning document, you will still have to execute a Will. This is called a “Pourover Will,” which serves as a reception for assets which you may have inadvertently forgotten to transfer in a Living Trust.
Finally, if you are in a high-profile profession or you have a volatile family situation with multiple marriages and children from these marriages, you may be better off with a Will. In other words, if you foresee that your estate my face a number of challenges, then you should have a Will as your primary estate planning mechanism.
Estate planning is a sensitive issue. Hence, you should consult your wills and living trusts attorney before you execute any of these. In Orange County, as a living trust attorney, I counsel my clients on the best estate planning mechanism that suits their needs specifically.