Choosing between Will-Centered Estate Plan vs. Trust-Centered Estate Plan

There are as many as 15 considerations that you might have to take into account when choosing whether to have a will centered estate plan or a Revocable Living Trust centered estate plan.

15 Considerations That Have To Be Weighed:

1. Cost

2. Privacy

3. Time

4. Protection from Court Challenges

5. Disability Planning

6. Protection from Creditors

7. Medicaid Planning

8. Continuity of Business Affairs

9. Rights of a Spouse

10. Fiduciary liability

11. Naming a Non-Resident Fiduciary

12. Divorce, Pretermitted Heirs, Adopted Children, and Income Tax

13. The Necessity that a Revocable Living Trust must be funded

14. Continuing Gift Program

Cost

The cost of preparing a will is relatively inexpensive compared to that of preparing a living trust. Writing a living trust usually involves more time beacuse it is a more complex document than the typical will. But if you execute a will and leave it at that without setting up a living trust, your estate will have to go through probate after your death, unless your estate is "small." Under the California Probate Code, the estate is considered a small estate if the value of the decedent's personal and real property is $166,250 or less (as of January 1, 2020.) The probate process in California is expensive, including court costs, attorney's fees, and executor's fees. For example, The bottom line is, the cost of living trust centered estate planning is significantly less than will centered estate planning.

Privacy

If you are concerned about privacy and confidentiality of your estate and financial affairs, you should consider living trust centered estate planning over a will centered estate plan. Because a trust is essentially an agreemnet between a trustmaker and a trustee, it is a totally private affair. Conversely, everything in probate is public. Thus, a will becomes a matter of public record once it is admitted to probate. Also, the inventory of the estate becomes a part of the public record.

Time

With will centered estate planning, upon a person's death, all activity ceases in the property held in the decedent's name and the delay begins. This can be especially harmful if the decedent owns a business or had sales or other business activities pending at the time of his/her death.

If the decedent had a will centered estate plan, the original of the will must first be filed in the probate court. The proate process in California takes long, it is almost impossible to close even the simplest probate estate less than a year.

A Will does not take effect unless until the will maker dies and the will is proved in the probate court as a valid will. However, a living trust does not have to be 'proved' in any court because its legal existence began when it was signed. Thus, living trust centered esate planning reduces or altogether avoids the short and long term delays that are inherent to will centered estate planning.

Protection from Court Challenges

Living trust centered estate planning gives more assurance that estate planning efforts will be free from litigation. Trust contests are rare because of the problem of standing and because when a trust is created, its maker, the trustor, is not required to give notice of its existence to anyone, and after the trustor dies, the successor trustee is only required to notify the trust's beneficiaries. Thus challenges by dissatisfied heirs are substantially reduced by the confidential nature of fully funded living trusts. On the other hand, will centered estate planning provide less protection from court challenges.