Trust or Will?

Should I choose a trust as the means of passing assets to my heirs? Should I use a will as the means to pass assets to my heirs? There are various factors involved in making this decision. Therefore, you should have proper legal advice from an experienced trusts and estates lawyer when making this decision.

As a first impression, a trust is the better tool when passing assets to heirs under the California Probate Code. The reason for this is that a trust avoids probate, which can be costly and lengthy. Probate administration fees, not including the court fees, will vary but are at least 4% of the estate. For large estates, administering the estate can cost millions of dollars.

Setting up a Trust avoids the lengthy process of going through the motions in a probate procedure. With full dockets and issues that come up, larger estates may take several months or perhaps years until the estate is fully probated.

Advantages of Using a Will

While your first inclination might be to use a trust, sometimes a will is the better means. It is generally much easier to make changes to a will than it is to a trust. Modifications to wills are as easy as drafting and signing an amendment, whereas modifications to a trust can be quite burdensome to make.

The testator’s personal circumstances will contribute significantly to this determination. If a testator believes that he or she will be making several changes down the road, then a will is probably the best avenue for estate planning. For instance, the testator may have a family dynamic wherein changing a will or the ability to change a will in a simple fashion is important. If the testator has been married multiple times and is uncomfortable with whom will inherit his money, changes may be forthcoming. He may be 60 years old and believes that his current marriage, given his track record, will not last. He needs the flexibility to quickly and easily make changes.

Similarly, a testator with difficult relationships with his or her children may require the flexibility of a will so that he or she can make changes about beneficiaries. As mentioned, it is best to discuss with a lawyer who understands the big picture when determining best methods for creating an estate plan.

Creditor Access

Another major consideration in the will v. trust dilemma is creditor protection. That is to say, a creditor of the heir will want access to the debtor/heir’s possessions once the heir receives the testator’s property. For instance, a child who divorces may have his or her inheritance challenged as part of the divorce proceedings.

With respect to a will, there is no protection against creditors. Once the child receives the proceeds of the will, a creditor such as an ex-spouse can motion for a change in alimony payments as reflected by the heir’s current and improved financial situation.

A trust, on the other hand, can be set up in a manner that shields beneficiaries from creditors. This is another significant factor in determining your best case for a will or trust.

Considering setting up a trust? Speak with the law firm of Melanie Tavare, an Oakland Trusts lawyer.