Wills and Trust are often confused for one another, and the question of which one you should have comes up constantly. State rather than federal law governs what happens to your property upon your death, so understanding wills and trust starts with understanding California’s rules specifically. Upon death, you may hear the word probate without knowing what it means. Probate is the process of administering an estate, with or without a will. Its purpose is to: 1) provide evidence of a transfer of title to the new owner, making the property marketable again; 2) protect creditors by providing a procedure for payment of the decedent’s debts; and 3) distribute the decedent’s property as intended once those debts are paid.
Will
A written document or oral declaration directing who will own your property when you die. A formal will must be in writing and, under California Probate Code §6110, signed in the presence of two witnesses who are present at the same time and understand they’re witnessing a will. Wills are typically used to gift or bequeath specific items or property to specific people or causes. A will need not be accompanied by a trust, but it becomes a public document once probate is opened with the court. A will has no effect until you die, and may be changed at any time before then.
Pour-Over Will
A type of will used alongside a trust. Rather than making specific gifts, a pour-over will sets forth that any property not specifically gifted elsewhere shall be given to a trust. In other words, any property not specifically gifted at the time of your death “pours” into the trust you previously created.
Holographic Wills
California recognizes an exception to the two-witness rule that matters for anyone weighing wills and trust options: a holographic will — one that’s handwritten and signed by the testator — is valid under Probate Code §6111 without any witnesses at all, so long as the signature and the material provisions (who gets what) are in the testator’s own handwriting. It doesn’t need to be dated, though an undated holographic will can create real problems if it conflicts with another will and there’s no way to establish which one came later.
A holographic will can be useful in a pinch — someone drafting their own final wishes without access to a lawyer or witnesses — but the informality cuts both ways. Because there’s no attorney review and no witnesses to confirm intent, holographic wills are far more prone to ambiguous language, incomplete instructions, and disputes during probate than a properly witnessed will drafted with legal guidance.
Trust
A legal document created during your lifetime that sets forth your desired outcome for your personal and real property. The primary difference between a will and a trust in wills and trust planning is that a trust becomes effective as soon as it’s created. A trust is intended to be private and avoids the costly, time-consuming process of probate — but it only covers property that has actually been transferred into it.
Revocable Trust
The creator, or Settlor, of the trust may make changes or wholly revoke the trust document at any time before death. To remain revocable, the Trustor must reserve the right to terminate the trust and retain all trust property. Upon the death of the Settlor/Trustor, a Revocable Living Trust becomes irrevocable.
With a Revocable Living Trust, you transfer your assets into the trust’s ownership while retaining control as its Trustee. The assets in the trust pass directly to your beneficiaries without going through probate upon your death. However, this is a common misconception people have about wills and trust planning: neither a will nor a revocable living trust avoids or minimizes estate taxes on its own.
Irrevocable Trust
The key difference from a revocable trust, in any wills and trust comparison, is right in the name: once created, an irrevocable trust generally cannot be changed. You’ve permanently given away those assets before your death, giving up control and interest in them. The benefit is that once relinquished, those assets are no longer considered part of your estate and generally aren’t subject to estate taxes — see the IRS’s overview of estate tax for the current federal exemption thresholds involved.
Weighing Wills and Trust: Benefits and Disadvantages
Benefits of a trust:
- Better management of your affairs
- Protects your privacy
- Can be created and changed easily (if revocable)
- Retains your control over assets
- Can survive far beyond your death
- Greater flexibility than a will alone
Disadvantages of a trust:
- May not be cost-effective for smaller estates
- If not properly funded, can create issues after your death
- Depending on the assets involved, may create greater tax liability
- No court oversight, unlike the probate process
Deciding between wills and trust options ultimately comes down to the size of your estate, your privacy preferences, and how much oversight you want built into the process. For most people weighing wills and trust decisions, the right answer depends less on which document sounds simpler and more on what actually happens to your property after you’re gone.
Related Articles
Why Use Bushore Real Estate
Holding Title to Real Property
Deductible Donations for Congregation Members
Disclaimer: Every situation is different and particular facts may vary thereby changing or altering a possible course of action or conclusion. The information contained herein is intended to be general in nature as laws vary between federal, state, counties, and municipalities and therefore may not apply to any given matter. This information is not intended to be legal advice or relied upon as a legal opinion, course of action, accounting, tax or other professional service. You should consult the proper legal or professional advisor knowledgeable in the area that pertains to your particular situation.
