What is a "Trust"?
A Trust is a private contract that enables you to transfer control, use and enjoyment of your assets to others in the event of your disability or death. Assets titled in the name of your Trust escape court supervised process (avoids probate). Instead, your trustee (someone that you have designated in your Trust document) will take control of the Trust assets at the time of your disability or death and will manage and/or distribute those assets to those that you have identified and designated in the Trust document and in the manner which you have articulated.
So your Trust does what most people think of their "Will" to accomplish, except that your Trust does a lot more than a simple Will. Your Trust not only identifies your beneficiaries, it also does that actual and physical "distribution" of those assets to your loved ones, all without going to court.
What is a "Will"?
A Will in its ordinary sense of the word as we know it is a document that designates the individual(s) who will be authorized to manage our assets in the event of our death as well as the manner in which we like our assets to be distributed among our loved ones.
However, a usual misconception is that a Will is all we need. In California, a simple Will accomplishes only the following objectives:
- It designates an individual as Executor/Executrix, and
- Who will get what, how much, and how.
But, it does NOT do the physical actual distribution of assets among the named individuals in the Will.
So then what?
Every Will in California should be lodged with the court which begins the probate court proceeding. All "heirs-at-law" of the deceased will get notified about the court proceedings who can then appear in court and make their own claims against the estate of decedent.
What is the difference between a "Will" and a "Trust"?
- A traditional Will "guarantees court process" after death. Whereas, a "Trust" avoids the court process.
- A Will informs the probate court of your intentions, wishes, and desires as to disposing your assets upon your death only, but does not operate upon disability. In other words, a Will does nothing for you in case of disability and court proceeding becomes a must.
- Even though a Will identifies the individuals that you wish to act as your representative after your death (called executors), a Will does not do one important task. It does not dispose of your assets. It does not distribute your assets to your beneficiaries, it only clarifies and identifies who should get what asset.
- A Trust, as part of an "estate planning" together with other estate planning documents, operates as the vehicle of disposing of your assets during your disability and after your death, so that involvement in the probate court proceeding will be avoided altogether.
In short, if you wish for your beneficiaries to go to court after your death to receive what you have left for them in your Will, then a "Will" is all you need.
However, if you wish to eliminate the court proceeding for your beneficiaries, and if you do not wish for the court to decide who gets what, then create a Living Trust based "estate plan."
