Chillious
Best choice for Financial and Cryptocurrency News

- Advertisement -

- Advertisement -

BTC
$19,268.05
-0.59%
ETH
$595.54
-1.03%
LTC
$88.11
-1.53%
DASH
$111.26
-8.51%
XMR
$133.74
+2.2%
NXT
$0.01
+4%
ETC
$7.54
+6.19%
DOGE
$0.00
+6.15%
ZEC
$83.07
+4.01%
BTS
$0.03
+2.56%
DGB
$0.03
+16.94%
XRP
$0.68
+4.45%
BTCD
$48.40
0%
PPC
$0.26
-8.04%
CRAIG
$0.00
0%
XBS
$1.19
-0.15%
XPY
$0.00
0%
PRC
$0.00
0%
YBC
$1,819.81
0%
DANK
$0.01
0%

Estate Planning: Why Do I Need a Will If I Have a Trust?

If you've spent any time at all talking about estate planning, you've probably wondered why you would need a Will if you have a Trust. That is a common question. Before we explore the answer, let's review some basic differences between the two.

Most people are familiar with a Will (or "Last Will and Testament" to be fully formal), but many do not really know what a "Trust" is. Think of a Trust as being a special box into which you place your assets (bank accounts, stocks, your home, rental properties, etc.) The person you appoint to take care of the box is called the "Trustee". This person is NOT the "Executor". An Executor is appointed in a Will, approved by a court, and only has authority after you die. A Trustee generally does not need court approval, and can handle things during your lifetime and after your death. This is why it is sometimes called a "living" Trust.

There are many differences between a Will and a Trust, but the most basic differences are:

  • A Will only takes effect when you die, but a Trust can be operative both during your lifetime and after your death.
  • Property given to someone under a Will must be distributed to them outright, with no strings attached. Property given under a Trust can be given outright, or it can remain in Trust and be supervised by the Trustee. It is possible to setup a Trust through a Will, but the result is still a Trust.
  • There is more potential to reduce your estate taxes if you use a Trust rather than a Will.
  • A Trust allows you to better protect your heirs from creditors, divorce, and other relatives (or step-relatives).
  • Property given under a Will must go through the Probate Court. That process is very expensive in California, it is time consuming, and it is very public. A Trust does not have to go through the Probate Court, can remain a private matter, the expenses of probate can be avoided, and the decedent's final affairs can be handled quickly.

For most people, having a Trust is well worth the expense of setting one up – a cost which is, by the way, generally far less expensive than a probate. It is customary (though not required) to name the same person as Trustee and as Executor, so that control of both Trust and non-Trust assets are centralized in one person.

So, why do you need both? Having a Will even if you have a Trust is like having a safety net. It is very common for people to accidentally leave something out of their Trust. The family home is a good example. People buy a new home, or refinance the existing one, and forget to title the property back to their Trust when they are finished. When the person dies, the house is not part of the Trust, so "who gets it" is decided by the Will. Ideally, the Will states that all assets pass to the Trust. This way, final distribution of assets still follows the plan laid out in the Trust. Without a Will, the State will decide who gets any assets that are not in the Trust. That may or may not be the people you wanted to have that property.

A good estate plan will always include a Will, even if it has a Trust. Regardless whether you decide to have one or both, you should always get help from a lawyer. In the long run, do it yourself estate planning usually results in more expense and unintended consequences.

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. AcceptRead More