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Under California law, an individual can set up a will, a living trust, or both, as part of their estate plan. They both have fundamental differences, but if you’re a California resident, and you’re wondering which one is right for you, it’s important to understand how each function under the state’s law. It can help you decide which approach you should use toward meeting your estate planning goals.
Most of us are familiar with the basic concept of a will. It’s a document that states the wishes and desires of a person after he or she has passed away. A will is a legal document recognized by the court that can include instructions on distributions of property.
In California, wills have limited power. A person may only use it to name beneficiaries for their owned assets, nominate guardians for their children, and appoint executors. A will also states instructions for burial or cremation as well as any other details about the person’s preferences for memorial services.
A California will has formal and legal authority, but it is limited to the concepts we have described above. A will on its own may be enough for individuals who own very few assets. However, assets can range from physical property to pensions and retirement plans. The truth is that many people may have more complex estate planning needs that would require more than just a simple will.
Like a will, a person can use a trust as an estate planning instrument to transfer property to named beneficiaries. The significant difference between a trust and will is that a trust operates independently from probate. A trust can be made revocable which means that it can be changed at any time during the grantor’s lifetime. However, it can also be made irrevocable, which means that it cannot be altered.
A trustee manages the assets that a person chooses to place in the trust. If you’re the person creating the trust, you can serve as a trustee, or you can appoint someone other than yourself to serve as trustee. While a grantor and trustee can be the same person, it helps to designate an individual other than yourself to manage the trust. This decision can protect you if you become incapacitated during your lifetime and are unable to make important decisions. Your appointed trustee can be in charge of carrying out the instructions outlined in the trust during your incapacitation or after your death.
The use of a living trust and a will together as part of your estate planning is acceptable under California law. The benefit of this approach is that you can address separate issues on each document. You can use a will to name a guardian and executor whereas a trust allows you to transfer property without the interference of probate, which by the way, is impossible to do so through a will.
Combining a will and a living trust is profoundly beneficial is when you have young children. The will
You have several options for planning your future through the use of either a will, a trust, or a combination of both. However, within each category, there are more specific variations. Many family members may remain confused about knowing which estate planning strategy is right for them. The number of assets, the people you plan to involve in the process, and your desires all need to be laid out carefully. Estate planning mistakes can be costly, and there isn’t much room for error.
An estate planning attorney with knowledge on wills and trusts can help you explore your options based on your personal needs and help you determine an appropriate strategy that guarantees your assets and loved ones will be protected.
Have more questions about wills and trusts? Contact us for an appointment.