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A Trust avoids probate, a Will requires probate. While both are equally effective for estate planning purposes upon your death, their administration is greatly different. In a trust, the administration begins immediately, and the assets are available to fund the ongoing operations of the trust if there is a business to maintain or mortgages to be paid. On the other hand, a will has to be probated and the estate has to be administered, which can take a minimum of nine months or up to five years depending on the size and complexity of the estate. With a Trust, a pour-over will is needed in order to place items in a trust that were not funded into the Trust prior to the settlor’s passing, therefore you need both a Trust and a Will in effective estate planning.
If you only have a will and you become incapacitated, then there will be the need for a conservatorship in order to administer your estate while you are alive. If you have a trust and you become incapacitated, then your successor trustee would take over and there would be no need for a conservatorship to administer your assets while you are alive.
A trust avoids probate because its existence continues after you pass—just like a corporation. When Steve Jobs passed away, Apple didn’t stop; it continued to function even though Steve Jobs was one of the creators. Likewise, your trust continues to function without you, while the successor trustee takes over, administers the trust, pays the bills, and sells or otherwise distributes the property. On the other hand, a will must be probated in order to have an administrator appointed. As the settlor, you will have pre-selected the successor trustee to handle your final wishes in distributing your estate.
If there are two settlors which are both trustees of the trust and one passes away, then the trust might remain revocable or become irrevocable depending on the choice that was made when it was created. In many cases, settlors choose to have it become irrevocable upon the death of the first person so that if the other person survives for many years, there is no undue influence if they remarry and no shifting of assets to the new spouse’s children. If the trust remains revocable, then that shifting could take place leaving the deceased settlor’s heirs with nothing, which is something that I have seen happen many times in the past. When the first settlor passes, you have the option of whether or not your trust becomes irrevocable, but when the second person or the sole settlor passes, the trust always becomes irrevocable. At that point, no changes can be made and it would usually be administered outside of the courts. If a question was not answered, then the trustee may have to go to the court for guidance, but in almost all situations, trusts never cross the threshold of the courtroom after its final settlor passes.
A trust administration involves notifying the beneficiaries that the settlor has passed and that the trust is being administered. The persons holding the property and the county recorders are notified of the death of the settlor and the fact that there is a new trustee in place. The successor trustee then begins the administration of the trust following the directions given by the person who created the trust to distribute the assets according to that plan. Additionally, creditors are given notice of the trust administration to start the clock on their time to file a claim against the decedent’s trust estate.
The initial trust administration usually occurs within a matter of weeks, at which point the successor trustee would begin to marshal the assets. Marshalling the assets includes making an inventory of everything available and earmarking what needs to be done to get those assets distributed to the correct beneficiaries. With probate, on the other hand, it could take months before the administration of the trust.
Yes, however, I have probated many estates where the decedent attempted to create their own trust but failed to properly do so which resulted in probating the entire estate. Creating a trust is very complex, so a person wouldn’t be able to effectively set up or administer one without the assistance of an estate planning attorney. Many people are concerned by the attorney fees, but they are generally lower than they think.
Administering a Trust is complex and requires many steps to ensure all assets are properly protected, that there are not taxes imposed which should not have been and that creditors claims are limited. Without the special knowledge of the process, a self-administered trust could end up a disaster.
I believe that my firm is uniquely qualified in that we not only handle trust matters but almost all fields of law that involve personal finances. As a result, we have a very strong grasp on litigating probate, litigating fraud, investigating, forensic accounting, and ultimately ensuring that trust is administered correctly.
We provide compassionate and aggressive representation coupled with the knowledge of the sensitivity of a passed loved one and provide the service in a manner that shows the respect of the final wishes of the decedent.
A trust can save your loved ones’ money, time, frustration, prevent their assets from being foreclosed on, and prevent them from experiencing adverse tax consequences. A properly created and administered trust will make the life of your loved ones much simpler and easier when you pass.
For more information on Trusts Vs. Wills In Estate Planning, an initial consultation with an experienced California Trust Lawyer is your next best step. Get the information and legal answers you are seeking by calling (916) 685-7878 or by filling out our convenient online contact form today.
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