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What is the difference between wills and trusts?
A will enables one to opt out of the Probate Code’s default rules on the order of succession. Like a trust, it identifies heirs and can be used for tax planning. Unlike a trust, a will must still be probated. The revocable trust, also called a living trust, has become one of the most popular testamentary devices in California for passing on wealth to the next generation. The primary reason may be the high costs, inconvenience, and loss of privacy associated with probate. The revocable trust also has a number of other advantages: It enables one to appoint a trustee who will have discretion over whether to pay income or principal to trust beneficiaries. Perhaps one child will be starting a business, while the other has married a Microsoft Executive. Or, perhaps the creator of the trust wants to encourage his children or grandchildren to pursue higher education. The trustee can be directed to encourage these pursuits over others, and pay income or principal to the beneficiaries accordingly. Moreover, the trustee can also be directed to withhold payments if the beneficiary exhibits negative behavior, say a drug addiction or gambling habit. These are just a few examples of the flexibility that a revocable trust has in providing for beneficiaries. |
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