What is Probate?

Probate is a legal process for distributing the estate of a deceased individual who left assets in his/her name without a beneficiary. It exists to transfer title of assets. In California, for estates larger than $100,000 or those containing real estate, probate requires court supervision. Learn more about the California Probate Process.

What is a Living Trust?

A living trust is a document wherein an individual (or couple) indicates who is to receive his/her (their) estate as well as who is to be responsible for distributing the estate. In that sense it is similar to a will. In fact, a living trust is an alternative to a will. The major advantage of a living trust to a will is the avoidance of probate provided that assets have been transferred (re-titled) in the name of the living trust. For a married couple with a large enough estate, there may also be some estate tax benefits from having a properly drafted and funded living trust.

One other major difference between a living trust and a will, is that a will is not implemented until the person dies. In other words, prior to death, the provisions of a will are meaningless. On the other hand, with a living trust, if the individual becomes incapacitated, the successor trustee (similar to the executor, but remember the executor only functions upon death) can function to manage the individual's affairs. Upon death, the successor trustee also distributes the estate according to the terms of the trust. In this respect the successor trustee is similar to the executor.

Who Should Have a Living Trust?

Estate planning benefits the children or heirs more than it benefits the individuals actually undertaking the estate planning. The major benefit to the individual doing the estate planning is peace of mind, knowing that they have organized their affairs and set in motion a plan for their estate when they are done. If avoiding probate is a goal, then a living trust is generally the best way to go!

There are a variety of ways to avoid probate, but all of them have some negative or potential negative implications. A living trust is a probate avoidance mechanism that allows the individual to keep control of all of his/her assets and provides no risk to the individual.

It is strongly recommended that people who own land have a living trust. It is foolish not to have a living trust if you own land in more than one state because otherwise there is a strong likelihood that there will have to be a probate in each state in which land is held.

Learn more about Living Trusts