Comparing a Last Will and Testament to a Living Trust

When it comes to estate planning, understanding the differences between a Last Will and Testament and a Living Trust is crucial. Both documents serve important purposes, but they function in distinct ways. Here, we’ll explore the benefits and potential disadvantages of each to help you make an informed decision.

Last Will and Testament

Benefits:

1. Simplicity: A Last Will and Testament is straightforward to create and typically less expensive upfront compared to a Living Trust.
2. Control: Allows you to specify how your assets will be distributed upon your death, including appointing guardians for minor children.
3. Flexibility: Easy to amend as your circumstances or wishes change.
4. Legal Clarity: Provides clear instructions for the probate court to follow, ensuring your wishes are legally recognized.

Disadvantages:

1. Probate is NOT Avoided: Wills, on their own, must go through the probate process. This means that the distribution of your assets is overseen by the courts, which is extremely expensive and time-consuming. In addition, the court ultimately has the power to manage or even modify the terms of distribution.
2. No Privacy: Probate is a public process, which means the details of your estate and assets, along with the steps taken throughout the probate process to distribute your assets, will be accessible to the public.
3. Delayed Access: Beneficiaries wait, on average, a minimum of one to two years before they can access their inheritance due to the probate process.
4. Limited Control Over Asset Management: Once you pass away, the executor is responsible for managing your assets according to the terms of your will, but with less flexibility than a trust provides.
5. Costs: While the upfront cost of preparing a Last Will and Testament is relatively low, the probate process is very costly. Probate costs are based on a percentage of the gross value of the estate. Consider the following example: if you own an average home in Orange County (where the current median home value is approximately $1,100,000) then the automatic, unavoidable probate costs exceed $50,000, between court fees, attorney’s fees, and executor’s commissions.

Living Trust

Benefits:

1. Avoids Probate: Assets placed in a Living Trust bypass the probate process, allowing for quicker and far less expensive distribution to beneficiaries.
2. Privacy: Unlike a will, a Living Trust is not a public document, keeping your estate affairs private.
3. More Immediate Access: A Trustee charged with administering a trust has much more flexibility in making early distributions, when appropriate, and finalizing administration much more quickly than in probate. Beneficiaries typically only wait a few months before they can receive their inheritance.
4. Additional Control over Asset Management: A Trust offers more control over how and when your assets are distributed, such as staggered distributions for younger beneficiaries.
5. Continual Management: A Living Trust allows for management of your assets not only after your death, but even, if needed. In other words, if you become incapacitated, the successor trustee can manage the trust on your behalf without court intervention.
6. Tax Planning: Estate planning provides much more flexibility in planning for and minimizing various types of taxes, including the death tax.

Disadvantages:

1. Cost and Complexity: Creating a Living Trust is generally more complex and expensive upfront compared to a will – though the up-front cost is far, far less than the costs of going through probate. A Living Trust, as part of a comprehensive estate plan, will commonly include various accompanying legal documents to ensure smooth administration.
2. Maintenance: Having a Living Trust requires occasional ongoing management to ensure all assets are properly titled in the name of the trust. If assets are not transferred to the trust, they may still be subject to probate.

Which Should You Choose?

In California, a Living Trust is typically recommended for most estates and situations. However, ultimately the choice between a Last Will and Testament and a Living Trust depends on your specific circumstances and goals. Here are a few considerations:

• If you want simplicity and are not concerned about probate: A Last Will and Testament might be sufficient.
• If you prefer to avoid probate, want privacy, or have a complex estate: A Living Trust could be more beneficial.
• If you are concerned about incapacity: A Living Trust provides a mechanism for managing your affairs without court intervention.

Both documents can be used together to create a comprehensive estate plan. For instance, you might have a Living Trust to manage most of your assets but also a “pour-over” will to ensure any assets not included in the trust are still distributed according to your wishes.

Contact Us for a Free Consultation

Understanding the intricacies of estate planning can be challenging, but you don’t have to navigate it alone. At Goodman Estate Law, we are here to help you make the best decision for your unique situation. Contact attorney Brett Goodman for a free consultation. You can reach him via email at brett@goodmanestatelaw.com or by phone at (949) 768-1491.

Let us help you secure your legacy and ensure your loved ones are protected.