Wills and trusts are the two most commonly used ways to pass down your wealth. However, they work differently and understanding the differences can help you determine which one will better serve your needs.

• Purpose:
  Wills and trusts are ideal for different situations. If you do not have any real property (house, land, condo, etc.), have few assets which can all be passed by beneficiary designation, and do not have a complex beneficiary plan, you should consider writing a will. A trust is better suited if you own any property (such as your house), have minor children, have special needs beneficiaries, want to protect against third-parties taking your beneficiaries’ inheritance, have objectives or concerns about how your beneficiaries use the inheritance, want to plan for incapacity, and more! A trust also helps you to reduce estate taxes and avoid the probate process after death.

• Setup: Wills are easier and less expensive to set up compared to trusts. In the case of a trust, you need various legal documents, and the process is more formal than that of writing a will.

• Effective Date:
  A will only takes effect after you die. A trust, on the other hand, can take effect as soon as the documents are signed and the trust is funded, depending on the terms of the trust. Once it takes effect, any assets in the trust are governed by the trust terms.

• Tax Considerations:
  A will does not help you with tax strategies (such as minimizing or avoid estate taxes if your estate is above a certain threshold) unless it has a testamentary trust built in. However, with either a revocable or irrevocable trust, you can minimize taxes for your beneficiaries and even protect your assets from being taken by third parties such as your beneficiary’s creditors. Irrevocable trusts usually offer the best tax benefits (depending on your situation) but have limitations on being modified after they take effect. Revocable trusts can still be optimized to limit taxes and tend to be the most popular choice for most situations as they can be modified during your lifetime.

• Privacy:
  A will is subject to probate, which is a time-consuming and expensive process that is also public so you don’t have privacy in these matters. A trust can help you bypass probate and offers more privacy for the beneficiaries and assets.

To maximize the benefits of each option, you should have wills and trust lawyers help you with creating the will or the trust. They will ensure both are properly set up and legally binding.

Living Will Vs. A Last Will And Testament

If you’re considering writing a will, there are two types of wills people are usually familiar with. The first is a living will. This is a document that contains your medical wishes and typically comes into play if you cannot make medical decisions for yourself.

In California, the living will has been incorporated into the Advance Health Care Directive – a document that both appoints an agent for you to make medical decisions and also contains your instructions (or “living will”).

The living will portion of the document dictates the type of medical care you do or don’t want and can contain specific instructions such as a DNR (Do Not Resuscitate) clause.

The last will and testament tells the court how you want your assets distributed when you die. Because your wishes are paramount in estate planning, the court generally will follow those instructions.

There are vast differences between the two, such as:

• An Advance Health Care Directive with your “living will” focuses on your medical and healthcare decisions while you are still alive, while a Last Will and Testament focuses on your wishes after death.
• An Advance Health Care Directive with your “living will” make ensure you get the medical care that aligns with your wishes, while a Last Will and Testament outlines who will receive your assets after death.
• Your last will must be signed in the presence of two witnesses. An Advance Health Care Directive can be either notarized or witnessed.

Helping you take care of your family long after you’re gone!

Developing a will or trust is an important event in everyone’s life. It is a huge testament to the love you have for the people in your life, and it shouldn’t be something that is done hurriedly. At The Law Office of Rebecca Sommer in Orange County, CA, we believe in making this process an interactive one where we listen to the needs of our clients and tailor an estate plan that suits their needs.

As your will or trust lawyer near me, we leverage our skills and experience to help our clients ensure their dying wishes are followed through their will or trust. To secure the future of your loved ones, you can contact us at (657) 571-1241 to get started on your will or trust today.