CA Will vs Trust Made Simple! | The Difference Between a Will and Trust (2024)

Have you ever wondered what the difference between a will and a trust is? And no, it is not common knowledge... However it can have a giant impact on the lives of the ones you love the most.
will vs trust

Have you ever wondered- What is the difference between a will and trust?

Have you ever wondered about the difference between a will and a trust?

It’s not common knowledge, but understanding this distinction can have a gigantic impact on the lives of the people you care about the most.

If you have property and want to ensure that it goes to the right people someday, then this article is for you.

We’ll delve into the definitions, benefits, and downsides of wills and trusts, shedding light on why it matters which option you choose. So, let’s dive in and explore the world of estate planning!

What is a Will?

A will is a legal document that establishes who will receive your property after you die.

It has no effect or power while you are alive or if you become incapacitated.

The benefits of putting a Will in place are:

  1. You can name guardians for any minor children;
  2.  You can choose who will be responsible for paying your estate’s debts and distributing your assets
  3.  You can put conditions on the distribution of your assets;

The major downside to having a will in California is that after you pass away it must be filed with the court and is subject to Probate.

On average, the probate process can take between 9 and 18 months to finalize.

During this time, your estate’s assets may be tied up and inaccessible. All the while you are paying court and attorney fees. (see how much that will cost here)

Lastly, once your will is submitted to probate it becomes a public record and can be searched by anyone.

Not only does this invade your privacy, but it increases the risk of predators trying to bring a claim against your estate.

What is a Trust?

A living trust is a document that acts as a form of ownership. Assets placed inside a trust are owned and managed by the rules of that trust.

The person who creates the trust is called the Grantor (or the Trustor). In most cases, the Grantor will act as the trustee of the trust until they become incapacitated or pass away, at which point a successor trustee will take over.

The Trustee’s job is to read the trust and carry out all of the trust’s instructions.

This is one of the major benefits of having a trust, it is valid while you are alive and well, if you become incapacitated, and ultimately upon your death.

Secondly, after you pass away, your trust does not need to be submitted to any court (privacy).

Your successor trustee will step in and marshal all of your assets during trust administration. Once they have control over all of your assets they will distribute them to your beneficiaries in the manner you wanted.

Since the assets are owned by the trust and not the deceased person’s name, those assets are not subject to the probate process. This is the main benefit of having a trust, avoiding probate.

5 quick differences between a Will and a Trust:

  1. Probate: A Will needs to go through probate court, a Trust does not.
  2. Privacy: A Will is filed and made public record after the death of the person who made the Will; A Trust is kept private.
  3. When a document takes effect: A Trust can govern assets prior to death, a Will only dictates what happens to assets after death.
  4. Title to Assets: You need to move assets into a trust when it is created, with a Will you do not have to move any assets.
  5. Distribution of Assets. Assets are distributed directly to beneficiaries with a Will. With a trust, the trust creator can decide when and how assets are distributed to beneficiaries.

Will vs Trust Resources

4  Differences Between a Will and Trust (Explained)

1. Trustee Responsibility | Will vs Trust

Unlike participants in the probate process, which is supervised by a court, trustees receive comparatively little regulatory oversight. Although they hold a great responsibility in law to act in the best interest of beneficiaries, there is a greater risk they will not meet that responsibility.

Choosing a trustee, and successor trustees in the event the first trustee cannot serve is therefore an important consideration.

In California, it is possible for individuals to establish a trust and name themselves both beneficiary and trustee. In fact, this is a relatively common occurrence, as it affords both uses of the assets and control of their management and distribution.

2. Probate Expense

Probate is not only time-consuming but expensive, potentially costing thousands of dollars. You may have to undergo the process more than once if you have foreign or out-of-state property, since assets held outside of California may be subject to another state’s probate proceedings.

Individuals with assets in other jurisdictions might, therefore, want to consider placing those holdings into a trust.

However, even in the absence of a trust, many assets are not subject to probate. These include assets with designated beneficiaries and may make up the majority of a person’s wealth. Examples are annuities, life insurance policies, retirement accounts, and many jointly owned assets.

Upon filing the appropriate paperwork with the financial institution, bank and investment accounts can also transfer immediately to beneficiaries after death without going through probate.

Therefore, it is not necessarily advantageous for everyone, particularly those with smaller estates, to establish a living trust to bypass probate.

It is important to note that while a living trust avoids probate, it does not necessarily result in a break on income taxes. While it is not necessary to file a separate tax return for a living trust, the activity of its assets must be reported on the beneficiary’s return.

3. Privacy

Although a trust is a legal entity, its details are kept private. The contents of a probated will, on the other hand, are a matter of public record. Individuals who value privacy might prefer a trust because it keeps prying eyes away from sensitive details about the existence of certain assets and who benefits from them.

In addition, once probate is opened, because it is a public record there is a greater chance of creditors making claims against the estate or contesting the proceedings.

Placing assets into a trust may serve to avoid some legal and personal arguments that might otherwise erupt upon revelations in a will.

4. Protection for Dependents

A will allows parents to pass the property on to their children, but the influx of money may have unintended consequences.

A will transfers all of the assets to the beneficiary at one time. Consider the possible consequences of an 18-year-old receiving a check for $250,000. A disabled adult who receives government assistance may lose eligibility for programs after receiving an inheritance.

In order to avoid this, a parent might transfer assets into a trust, naming the child as a beneficiary. With the right trustee, this arrangement can ensure protection for an individual who may require lifelong assistance.

Additionally, a parent can have the child’s inheritance pass over a term of years, such as 1/3 of the estate at age 25, 1/3 of the estate at age 30, and 1/3 of the estate at age 35.

Prior to the child receiving these distributions, the trustee may be authorized to help the child pay for education, rent, health care, and overall support.

Structuring a trust in this manner helps to prolong the inherited assets and makes it less likely they will be squandered.

Some parents, or grandparents, want to provide financial assistance to loved ones but choose to put conditions on that help.

Unlike a will, which results in beneficiaries receiving their proceeds as soon as the legal processes are complete, a trust may have established criteria.

For example, funds might be disbursed at different ages, or only upon completion of a college degree.

Irrevocable vs. Revocable Living Trust vs. Testamentary Trust

Depending on individual estate planning objectives, a living trust may be irrevocable or revocable. An irrevocable trust cannot be terminated or changed.

Because you cannot terminate or change the trust, you have in effect given your assets away, and they can no longer be touched by creditors.

Irrevocable trusts are used when creating an asset protection strategy or to help offset estate taxes. An individual gives away control of their property for the benefit of their beneficiaries and creditors can no longer reach them.

Most living trusts are revocable trusts: assets may be added or removed from the trust and the trust may be terminated as long as the grantor has the ability to make the changes.

Assets in a revocable trust are not shielded from creditors.

Both irrevocable and revocable trusts avoid probate.

A testamentary trust comes into effect upon death and does not avoid probate. However, once the probate process is over, those assets remain in the trust.

They are managed by an appointed trustee, who has a fiduciary duty to act appropriately for the benefit of beneficiaries according to the terms of the trust. Trustees cannot misuse or mishandle trust assets for their own enrichment.

California Will vs Trust Chart

Difference between will vs trust

Will vs Trust: Conclusion

In conclusion, the difference between a will and a trust is a crucial factor to consider when it comes to estate planning.

While both options have their advantages and disadvantages, understanding the nuances can help you make an informed decision about how to protect your assets and provide for your loved ones in the future.

Whether you opt for a will, a trust, or a combination of both, seeking guidance from an experienced estate planning attorney is essential to ensure that your wishes are properly documented and legally sound.

Opelon LLP is here to provide confidential and informed advice to help you achieve your estate planning objectives.

Don’t leave the fate of your assets and loved ones to chance—take control and plan ahead with the right legal tools.

Picture of Matt Odgers

Matt Odgers

Attorney Matthew W. Odgers is a partner and co-founder of Opelon LLP, a firm based in San Diego, California that focuses its energy on Estate Planning, Trust Administration, and Probate

Table of Contents

Related Posts

Lets Chat!

Get In touch

How can we help you?

(760) 278-1116

Call for a Free Consultation

Address 1901 Camino Vida Roble, STE 112, Carlsbad, CA 92008


Skip to content