Estate Planning: Why do I need a will if I have a trust?

If you’ve spent any time talking about estate planning, you’ve probably wondered why you’d need a will if you have a trust. That is a common question. Before we explore the answer, let’s review some basic differences between the two.

Most people are familiar with a will (or “last will and testament” to be completely formal), but many don’t really know what a “trust” is. Think of a trust as a special box in which you put your assets (bank accounts, stocks, your house, rental properties, etc.) This person is NOT the “Executor.” An executor is appointed in a will, approved by a court, and only has authority after the executor’s death. A trustee usually doesn’t need a short approval and can handle things for the life of the trustee. Y after your death. This is why it is sometimes called a “living” trust.

There are many differences between a will and a trust, but the most basic differences are:

• A will is only effective when you die, but a trust can be operational both during your lifetime and after your death.
• Property given to someone under a will must be distributed directly, with no strings attached. Property granted under a trust may be granted directly or may remain in the trust and be supervised by the trustee. It is possible to set up a Trust through will, but the result is still a trust.
• There is a better chance of lowering your estate taxes if you use a trust instead of a will.
• A trust allows you to better protect your heirs from creditors, divorce, and other relatives (or stepparents).
• Property given under a will must go through the Probate Court. That process is very expensive in California, time-consuming, and very public. A trust does not have to go through probate court, it can remain a private matter, probate expenses can be avoided, and the decedent’s final affairs can be handled quickly.

For most people, having a trust is worth the expense of setting one up, a cost that, by the way, is usually much less expensive than an estate. It is customary (although not required) to appoint the same person as Trustee and Executor, so that control of trust and non-trust assets is centralized in one person.

So why do you need both? Having a will, even if you have a trust, is like having a safety net. It is very common for people to accidentally leave something out of their Trust. The family home is a good example. People buy a new home or refinance an existing one and forget to return the title to their escrow when they’re done. When the person dies, the house is not part of the Trust, so the will decides “who gets it.” Ideally, the will states that all assets go into the trust. In this way, the final distribution of the assets still follows the plan established in the Trust. Without a will, the State will decide who gets the assets that are not in the trust. Those may or may not be the people you wanted to have that property.

A good estate plan will always include a will, even if you have a trust. Regardless of whether you decide to have one or both, you should always get help from an attorney. In the long run, do-it-yourself estate planning often leads to more expense and unintended consequences.