Many people that have not looked into the subject very deeply assume that you do not need a will if you have a living trust. There is some truth to this when it comes to transferring the lion’s share of your assets, but there is more to the story.
Before we explain the details, we will provide a rundown of the benefits that living trusts provide for people that may not know a lot about them.
Efficient Estate Administration
If you use a will to facilitate asset transfers, it would be admitted to probate after your passing. The executor that you name in the document would complete the administration tasks, and the court would examine the will to determine its validity.
There would be a notice posted for creditors, and they would be given time to come forward. Meanwhile, the executor would identify the assets and prepare them for distribution, so appraisals and liquidations will be necessary.
No inheritances can be distributed while the estate is being probated, and it will usually take nine months to three years. Probate expenses can greatly shave down the value of the estate before it is distributed to the heirs, and probate records can be accessed by anyone that has a passing interest or curiosity.
You can create a more turnkey estate administration experience for your loved ones if you use a living trust as the centerpiece of your estate plan. While you are living, you would be the trustee, and you would name a successor to assume the role when the time comes.
The trustee would not be bound by probate supervision. They would be able to distribute assets outside of probate, so the hassles that we described above would be avoided.
Asset Protection
When a will is used, all the assets that comprise the estate would be distributed in lump sums after the estate was closed by the probate court. The inheritors would then go forward with their bequests, and there would be no inherent controls or asset protection.
You do not have to shrug your shoulders and hope for the best in this regard if you use a living trust. After your passing, the trust would be irrevocable, and the beneficiary would not have direct access to the assets unless you provided so.
Since the beneficiary would not be able to tap into the resources, the creditors of the beneficiary would step into the same shoes and be able to access their inheritance.
You can control the nature of the distributions to the beneficiary when you set the terms. For example, you can instruct the trustee to distribute the earnings that are generated by income-producing assets in the trust, or you could provide a certain dollar amount each month.
These are a couple of examples, but you would be able to set any terms that you feel comfortable with when you establish a revocable living trust.
Pour-Over Will and Guardian Designation
Now we can get to the specific point that we want to cover in this post. You may pass away while you are still in possession of some assets that you never conveyed into the trust. To account for this, you should include a pour-over will when you are creating your estate plan.
This type of will facilitates the transfer of these assets into the trust after your death, and this would simplify the estate administration process.
It should be noted that a California estate planning attorney can file a petition to ask the court to allow the transfer of personally held assets into a living trust. The petition would contend that the decedent intended to convey the property into the trust.
Another reason to use a will is to account for guardianship of a minor child or dependent adult. You cannot designate a guardian in a living trust, so you would have to state your guardian designation in a will.
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