Wills are perhaps the best known estate planning vehicle and have been the most common way to pass property to heirs for hundreds of years. However, in modern day California, where home values are very high, nearly all estates governed by a will must go through an expensive and time-consuming Probate Court process.
The revocable living trust is a will alternative that is an advantageous option for anyone who owns real estate or has any significant financial assets.
What are the Main Differences Between a Will and a Trust?
There are two main differences between a will and a revocable living trust that can help you understand which estate planning solution is right for you.
1. A will has to go through the Probate Court to be administered, a trust does not.
If your property is governed by a will, the Probate Court must oversee the property’s distribution, to make sure everything is handled according to your wishes. By going to Court, the contents of your will become public record. Also, the Probate Court process in California takes about 12-16 months before property can be distributed, and it will cost your family about 5% of the value of your estate. If your home were the only property you owned, and it had a market value of $600,000, your family would lose $30,000 just to the Probate Court process.
2. A will may initially cost you less than a trust.
LifeLadder Estate Planning’s Family Plan is a comprehensive will-based package that starts at $1500 for an individual, $2500 for a couple. The Trust Plan ranges from $3500-$5000. However, as mentioned above, the administration costs of a will are higher than a trust, because the will must go through the Probate Court process. The initial savings of a will may be enticing, but it will leave your loved ones with the future courts costs totaling about 5% of the value of your entire estate, and put them on hold for 12-16 months.
The only way to make a fully informed decision between a will and a revocable living trust is to discuss your situation with a qualified attorney. A will or trust is just one piece of a comprehensive estate plan.
To find out more about estate planning with LifeLadder, click "Get Started" and watch our 10-minute webinar.