Living trusts v. Last Will

[irvineboy]

What is the name of your state (only U.S. law)? CA

My understanding is that a living trust transfers all property and assets to the trustee, avoiding probate and expensive court fees, when the trustor dies. A last will does the same thing when the trustor dies, but it can be subject to probate. It sounds like a living trust is more advantageous. So why would anyone do a will over a living trust?


Why do married couples need a living trust or a will? Doesn't one spouse automatically get all the properties and assets when the other spouse dies? And if both spouses die, then assets automatically go to their children. Correct me if I am understanding this incorrectly, but a living trust sounds like it is for single people or people not legally married who want to pass assets and properties to a loved one or a friend.

 

[FlyingRon]

You understand wrong. The trustee is just the person who administers the trust. The trust assets are transferred to the beneficiaries of the trust based upon the language of the trust. For example, my wife and I have trusts that name trustees who are not beneficiaries of the trust (other than for being compensated for their service). My sister (an attorney) and my wife's sister (trustworthy) are the successor trustees. The assets of the trust go to my two children, one outright and the other through another trust. Further, some of the tax preferences for trusts (AB trusts, etc..) require that the trust not just go into the hands of the beneficiary on your death.

Still trusts can be a valuable estate planning method. The major issue however is that a trust controls ONLY the assets that are titled to it. If you create a trust and don't give it any assets (like retitling your house, investment accounts, etc...) into it, it is entirely superfluous as it doesn't have anything to manage/distribute.

With that understanding, there is always things (personal possessions) that don't or can't get owned by the trust. You'll have at least a pour-over will that deals with whatever's left over (not in the trust, and not transferred outside probate via things like JTWROS, TBE, etc...).

To answer your second question, the surviving spouse does NOT automatically get all assets. In nearly all states (including your state of California), the community property is split between the surviving spouse and the children in the case where there is no will. Again, joint accounts with survivorship rights, tenants by entirety deeds, etc.. pass outside of the estate, but the rest is split.

If you want your spouse to have ownership of everything to the exclusion of the children, you need a will possibly augmented with a trust.



If you have a non-trivial amount of stuff in your estate, you probably would like to speak to an estate planner and figure out what combination of wills and which trusts make sense for you and what the terms should be. While your at it, do your loved ones a favor and set up your advanced medical directives (living will) and health care (and possibly general) POAs to cover you if you become incapacitated. We got this done just in time for my mother in law (she was diagnosed soon after with alzheimers).

My father (an attorney) always said getting a will was on his bucket list. I eventually sent him to my attorney to get it done.

 

[irvineboy]

You understand wrong. The trustee is just the person who administers the trust. The trust assets are transferred to the beneficiaries of the trust based upon the language of the trust. For example, my wife and I have trusts that name trustees who are not beneficiaries of the trust (other than for being compensated for their service). My sister (an attorney) and my wife's sister (trustworthy) are the successor trustees. The assets of the trust go to my two children, one outright and the other through another trust. Further, some of the tax preferences for trusts (AB trusts, etc..) require that the trust not just go into the hands of the beneficiary on your death.

Still trusts can be a valuable estate planning method. The major issue however is that a trust controls ONLY the assets that are titled to it. If you create a trust and don't give it any assets (like retitling your house, investment accounts, etc...) into it, it is entirely superfluous as it doesn't have anything to manage/distribute.

With that understanding, there is always things (personal possessions) that don't or can't get owned by the trust. You'll have at least a pour-over will that deals with whatever's left over (not in the trust, and not transferred outside probate via things like JTWROS, TBE, etc...).

To answer your second question, the surviving spouse does NOT automatically get all assets. In nearly all states (including your state of California), the community property is split between the surviving spouse and the children in the case where there is no will. Again, joint accounts with survivorship rights, tenants by entirety deeds, etc.. pass outside of the estate, but the rest is split.

If you want your spouse to have ownership of everything to the exclusion of the children, you need a will possibly augmented with a trust.



If you have a non-trivial amount of stuff in your estate, you probably would like to speak to an estate planner and figure out what combination of wills and which trusts make sense for you and what the terms should be. While your at it, do your loved ones a favor and set up your advanced medical directives (living will) and health care (and possibly general) POAs to cover you if you become incapacitated. We got this done just in time for my mother in law (she was diagnosed soon after with alzheimers).

My father (an attorney) always said getting a will was on his bucket list. I eventually sent him to my attorney to get it done.

FlyingRon,

Thanks for the insight. I did not know that in situation where the father dies, his assets/properties get split evenly among his family. I thought wife got everything. So if he has one child, then wife and child each receive half of his assets/properties???

 

[FlyingRon]

FlyingRon,

Thanks for the insight. I did not know that in situation where the father dies, his assets/properties get split evenly among his family. I thought wife got everything. So if he has one child, then wife and child each receive half of his assets/properties???

Without a will, the laws of intestate succession apply.

With a surviving spouse and one child, the spouse gets 1/2 and the child gets 1/2. If there is more than one child the spouse gets 1/3 and the children split the other 2/3 (regardless of how many more than one there is). This doesn't count anything that transfers outside of the estate such as property held with survivorship rights or by the entirety.

You need to get your stories straight between the sites. On the other site you have two children, here you have one.

 

[quincy]

Here is a link to irvineboy's other recent thread, with questions that relate to the questions asked here:

https://forum.freeadvice.com/wills-trusts-estate-planning-113/beneficiaries-628439.html

 

[irvineboy]

Without a will, the laws of intestate succession apply.

With a surviving spouse and one child, the spouse gets 1/2 and the child gets 1/2. If there is more than one child the spouse gets 1/3 and the children split the other 2/3 (regardless of how many more than one there is). This doesn't count anything that transfers outside of the estate such as property held with survivorship rights or by the entirety.

You need to get your stories straight between the sites. On the other site you have two children, here you have one.

Two different scenarios. Also sent you a PM.

I did some research. You have the community property and the separate property definitions mixed up.

http://www.legalmatch.com/law-library/article/intestate-succession-in-california.html

You are saying is that in cases where there is more than one child, the wife gets 1/3 regardless of the number of children.

Two kids - kids split the 2/3 and the wife gets 1/3?
Three kids - kids still split the 2/3 and wife gets 1/3?
Four kids - kids still split the 2/3 and wife gets 1/3?
One kid is the only time where it is split 1/2 between the wife and kid?

According to the link above, the above scenarios only pertains to how SEPARATE property, not community property, is divided up after death. In community property, it says that the spouse receives 100% and kids don't get anything.
Please confirm.