When asked which documents are associated with estate planning, most in Woodland Hills would likely say a will. Yet in some cases, some may confuse the legal characteristics of a will with that of a trust. Yet a will and a trust are not the same thing. Where a will is simply a legal document that states how one’s assets are to be distributed upon his or her death, a trust actually provides for the management of assets and property both when the trustor is alive and after his or her death.
So when people start their estate planning, which tool would be best for them? Given that according to WealthManagement.com, nearly 60 percent of those engaged in estate planning are so doing in order to avoid probate, one could assume that most would want the asset protection afforded by a revocable living trust. Aside from the potential of being able to avoid probate, this particular type of estate administration tool can be beneficial in other situations, as well, such as:
- If one has minor children from whom assets from an inheritance would need to be held until they reach a certain age.
- If one needs to put a specific asset management plan in place for beneficiaries with special needs.
- If one’s estate is above the estate tax threshold.
While a living trust does offer one more control over his or her estate after death than a will, it does come with some drawbacks, as well. The California Bar Association correctly points out that trusts costs more to set up than wills. It states that it could be difficult to list trust assets as collateral for a loan, and that the potential does exist for a trustee to abuse or neglect his or her fiduciary duty.