Tuesday, September 18, 2012
Living Trust Vs Will: An Easy-To-Read Comparison for Californians
If you're from California, you probably keep hearing about Living Trusts and you might be wondering why do I need one? Indeed, my clients often ask me, "Isn't a Will good enough?" Well, the answer to that question depends on your particular circumstances.
You see, if you don't own a home and your personal property assets total less than $100,000, a Last Will & Testament is probably the appropriate transfer planning device for you. With a Will, you can avoid having your assets arbitrarily distributed to unintended beneficiaries and you can also nominate guardians for any minor children.
But, if you own a home or have over $100,000 in personal property assets, then it's highly likely your estate will need to pass through Probate. Probate is an expensive and time-consuming court proceeding that is usually unnecessary. Some people think if they have a Will they can avoid Probate. The opposite is true though. If you own a home or have personal property assets totaling over $100,000, having only a Will virtually guarantees that your estate will need to be Probated. Conversely, if you create and fund a legally valid Living Trust there will be no need for a Probate. That's because a Trust holds your assets, similar to the way in which a corporation holds it's assets. Since the Trust holds your assets instead of you directly, there are no assets for a Probate court to transfer upon your passing. Instead, the Trust itself enables the Trustees to easily take care of this process themselves for the benefit of the Living Trust's beneficiaries.
But what is a Living Trust exactly?
Simply put, a Living Trust replaces what most people think of, when they think of a Will. In other words, a Living Trust dictates to whom and how your assets are to be distributed after you're gone. A Trust also empowers a person or persons to carry out these duties. So far, this is virtually identical to a Last Will & Testament in California.
However that is where the similarities end. Besides Probate avoidance, a competently drafted Living Trust allows for sophisticated transfer tax planning and it helps families avoid conflicts. A Trust also can protect family assets from spendthrift children and their creditors. These are just a few financial examples of the post-death concerns that Living Trusts address and resolve.
But also, if you become incapacitated during life because of mental or physical disability, a Trust enables Successor Trustees to step in and help you. This is a major difference to Wills because they only take effect after a person's death. This additional function of Trusts helps to avoid an embarrassing, time-consuming, and expensive court Conservatorship. A Conservatorship is yet another court proceeding that is needed to appoint someone to help you, if and when you can no longer take care of yourself because of physical or mental incapacity. A properly drafted and executed Revocable Living Trust helps you to avoid a Conservatorship similar to how it helps your family avoid a Probate proceeding.
Without a doubt, Living Trusts allow families to achieve all sorts of unique and important goals. That is why Trusts are highly publicized. It is also why, Californians who own a home or have personal property assets that total greater than $100,000, should seriously consider setting up a Living Trust instead of just a Will.
Article Source: http://EzineArticles.com/5695807
Posted by Rene at 9:54 AM