If you live in California and you are creating an estate plan, you might wonder what the difference is between a will and a trust and whether you need one or both documents. Most people need at minimum a simple will as part of their estate plan, but not everyone needs a trust.
The last will and testament
You can use your will to appoint a guardian for your minor children, appoint an executor for your estate and specify what you want to happen with your assets. A will must pass through the probate process, meaning that a court must validate the will. Some people consider this to be a disadvantage since although it is relatively straightforward, it takes some time and may cost some money. If a person dies without a will or other provisions for their assets, the state determines how to distribute assets.
Trusts
Trusts do not have to go through the probate process, and unlike a will, they are private. Assets placed in a trust may pass directly to beneficiaries, but you may also specify that you want distributions to only happen at certain times. Trusts may be revocable or irrevocable. The latter generally cannot be changed after their creation, but they offer greater protection against creditors and other threats. You can make changes to a revocable trust, including canceling it. Trusts can also help protect your estate from taxes. However, there is usually a cost to create and maintain them.
Some people use a trust as their main estate planning document and create what is sometimes called a pour-over will, which moves their remaining assets into the trust when they die. Everyone’s estate planning needs differ based on their situation, and an attorney may be able to help you decide if you need a will or one or more trusts.