I Have a Will, Why Do I Need a Trust?
You have a last will and testament. Your will directs that, at your passing, your spouse will inherit everything you own. It further directs that if your spouse dies before you, your children will inherit everything. Why do you need a Trust?
The most apparent reasons are time and money. The first reason why you need a trust is that a will does not avoid court; a will gives instructions to the court. A California probate estate administration is a lengthy process. It is very unusual to complete the process in less than a year. Your beneficiaries must wait for a court order before distributions may be made to them. In addition, attorney and executor fees are set by statute in California. An estate valued at $1,000,000, would incur attorney and executor fees totaling at least $46,000. If you are house-rich and cash-poor, how will your beneficiaries meet these obligations? If you have a trust, the attorney’s fees and trustee’s fees may be substantially lower and distributions may be made to your beneficiaries more quickly and without court supervision.
The second reason you want a trust is that the last will and testament only comes into play after your death. If you become incapacitated, a trust allows the Trustee that you have chosen to quickly and easily step in and manage your trust assets for your benefit. This may help you avoid a costly and very public conservatorship proceeding. A conservatorship is put into place when a person can no longer manage their own affairs and no mechanism is currently in place, i.e. a trust and/or durable power of attorney, to allow someone else to step in and help you. Conservatorships are heavily supervised by the court and thus the attorney’s fees may be quite high. It is expensive to establish the conservatorship and annual reporting requirements incur additional fees every year until your death.
Both a will and a trust will direct distribution of your assets after your death. However, a well-drafted trust will also enable someone to manage your assets during your lifetime if you become incapacitated. Finally, a trust may save substantial time and money in the administration of your estate after you are gone.
Call an estate planning attorney today and make your life and death easier.
Feb 19
