People generally look at a trust versus a will as an either/or proposition, but in fact, you do need a will if you have a living trust. Before we share the details, we will explain the reasons why you may want to use a living trust as the centerpiece of your estate plan.
Smooth and Efficient Estate Administration
When you are making estate planning decisions, you should think about the actions that must be taken after you are gone to bring your wishes to fruition. This is the process of estate administration, and it can be smooth and efficient, or it can be complicated.
You may assume that a simple will would be very easy to administer, but there is a legal process that a lot of people don’t understand until they are faced with it. If you use a will to arrange for postmortem asset transfers, it would be admitted to probate.
The executor that you name in the document would handle the estate administration tasks, and the court would preside over the process. Creditors can seek payment during probate, and the executor will identify the assets and prepare them for distribution to the heirs.
There is a proving of the will, and if anyone wants to question its validity, they can make their case during probate.
The expenses that accumulate will typically consume somewhere between three percent and seven percent of the value of the estate, and this is another negative.
We shared all of this to explain why so many people use living trusts. When assets are transferred through the terms of a living trust, the probate court would not be involved at all.
Flexibility and Spendthrift Protections
You will act as the trustee throughout your life if you establish a living trust, and you will name a successor to take over the role after your passing. Your heirs would be the beneficiaries of the trust.
Your ability to do anything you want to do with the assets would not change at all. If you would like to change the terms or alter the trustee or beneficiary designations, you can do so, and you can convey additional property into the trust at any time.
Another benefit is the ability to include spendthrift protections. A spendthrift clause can be added, and the trust would become irrevocable after your death. The beneficiary would not be able to access the principal, and their creditors would be in the same position.
You could leave specific instructions for the trustee with regard to the nature of the distributions. For example, you could provide a certain amount each month for a prescribed period of time, and you could allow the trustee to make additional distributions on a discretionary basis.
Pour-Over Will and Guardian Designation
Even if you have a living trust, you may have property in your personal possession at the time of your passing for one reason or another. To account for this, your estate plan should include a pour-over will. This would facilitate the transfer of the personal property into the trust.
It should be noted that the transfer would be subject to probate, but it would be a more straightforward process.
If you are devising your estate plan when you have dependent children, you cannot designate a guardian for the children in a living trust. For this reason, you should have a will that includes your guardian designation.
Attend a Free Seminar!
We like to connect with members of our community to share information at our estate planning seminars. These sessions are offered on an ongoing basis, and we encourage you to join us because you can save a lot in the long run if you invest a little bit of time.
There is no charge to attend these seminars, but we ask that you register in advance so we can reserve your spot. To see the dates, visit our Burbank, CA estate planning seminar page and follow the simple instructions to register for the session that fits into your schedule.