WILLS AND TRUSTS

One of the most crucial aspects of life is the ability to protect you and your family’s future. How would you like to spend your final years, and how would you like to provide for your loved ones then and thereafter? These are important questions to ask yourself when envisioning your life’s path. However, answering these questions is merely the beginning. You then must choose whether to solidify your plan in a will or trust. For many of my clients, this the trickiest step, so I’d like to give you a brief overview of each type of document so that you may begin to form an idea about what may best suit you and your family’s needs. 

LIVING WILLS

Living wills are a type of advanced healthcare directive. They state your wishes regarding medical treatments that prolong human life and do not take effect until you are physically or mentally incapacitated. Living wills allow you to appoint power of attorney to someone that you trust so that he or she may direct your healthcare decisions when need be. Because they are completely unrelated to your financial assets, most choose to draft an additional document, such as a trust or last will and testament, to detail their arrangements for the years to come. For further information, see Power of Attorney. 

TRUSTS

Trusts outline the rules you want followed for the assets in holding for your beneficiaries. There are two main types of trusts: revocable and irrevocable. Revocable trusts allow you to maintain ownership of your assets while you are alive. Irrevocable trusts, on the other hand, require you to delegate ownership of your assets to your heirs immediately but later lessen the amount owed in estate taxes (Note: It is important to know that estate taxes are not enforced in the state of California). One of the biggest advantages of trusts is that they prevent your family from having to undergo the lengthy and costly process of probate at the time of your passing. However, they are initially a larger investment and require more information at the planning stage than a last will.

ADVANTAGES OF A TRUST

There are many benefits to choosing a trust over a last will and testament. Initially, a trust is helpful because it provides you with a comprehensive document that is easily amendable. A trust also bypasses the need for a conservatorship. This is the legal process of appointing a guardian at the time of mental incapacitation. A trust later prevents your family from having to complete the probate process after you have passed on and ensures that your financial information and final wishes remain private. Furthermore, trusts give you the freedom to appoint yourself or an industry expert, such as a financial planner, as the first trustee. With a trust, you may stretch out distributions to beneficiaries over a period of time and protect your heirs against creditors and those who may wish to prey upon them financially. Last but not least, a trust gives you the option to include a “pour-over will” that covers anything you leave out by mistake.

DISADVANTAGES OF A TRUST

Unfortunately, a trust does not come without its share of downfalls. Most importantly, a trust will cost more than a last will at the initial stage of planning and you have to provide more information up front. Furthermore, a trust contains more complicated documents than a last will and states that your assets must be assigned to the trust.

LAST WILLS AND TESTAMENTS

Last wills and testaments serve the same purpose as trusts but provide you with fewer options in exchange for a lesser initial investment. Here are some of the key components to consider when deciding whether or not to outline your inheritance in a last will.

ADVANTAGES OF A LAST WILL

There are a few reasons people commonly choose to outline their plans in a last will and testament rather than a trust. A last will uses simple language and is less expensive than a trust during the planning period. Additionally, a will allows you to make changes without re-titling your assets at the bank.  

DISADVANTAGES OF A LAST WILL

The saying “you get what you pay for” holds true in the situation of wills and trusts. Although a last will is less expensive and easier to draft, it carries several downfalls as well. First and foremost, it necessitates that your family goes through the probate process after you are deceased, which is both time-consuming and costly. Furthermore, probate must be completed in all states where real estate is owned. Your last will and record of financial assets then become public record after the probate process is completed. A last will also applies only to assets owned by you alone and does not include life insurance or assets with a signed beneficiary designation. Finally, a last will offers little room for customization and provides no protection to your heirs against creditors and financial predators. 

ENSURE YOUR VOICE IS HEARD

In conclusion, both wills and trusts allow you to coordinate not only how your assets will be distributed after you pass on, but how you and your family will be cared for in the future. While I hope that this information has helped you begin to ponder your estate planning needs, I strongly recommend that you design your estate planning documents under the guidance of a trusted attorney. Minute errors can obliterate a will or trust’s validity. Furthermore, it is imperative that these documents are clear and legally sound as conflicts can arise when beneficiaries disagree about the legitimacy of the document or your intentions. I have been helping individuals in the Chula Vista community craft their ideal wills and trusts for 42 years, and I am here to ensure your voice is heard now and throughout the years to come.