People are born, they grow, turn old, and then, reach the inevitable end. This journey includes learning and earning before they say the final goodbye, leaving behind what was saved for their coming generation. What if the wealth earned is not received by them? Managing the estate planning is one of the major things that need to be planned.
The Will and the Trust are some of the most commonly heard terms in Estate Management. They are often used with each other but hold a different meaning altogether. Where a will is a legal document that presents the manner in which an estate holder wants their property to settle after they die, trust, however, is a mean of estate transfer that has a distinct meaning. It is a legal process in which one party gives the authority to the second party (trustee) to handle their assets for the benefit of the third party. The third party here is the inheritor of the first party.
Legal Privacy
Where on one side the content of a will is considered public, the details of the trust are kept in private. So, people who have some sensitive details prefer trust over a will. As the will is not a private document, once it is declared, there are chances that people can raise claims against the estate. Trust, on the other hand, secures from such legal arguments.
Security Concern
Where a will provides direct access of the property to the heir, trust involves a third party. So, in situations where the heir is not in a situation to handle the property (mentally challenged), the third party handling the trust can help. This can provide heir the protection with their assets. Also, in some of the situations, the inheritance can be passed over the term of years, for instance, 1/3 of the estate at the 18 years of age, 1/3 at 25 years of age and the remaining at the age of 30.
Disability Issue
In case of a will, if the first party becomes disabled, the court appoints a guardian to control finances and assets. The will doesn’t have any legal effect till the first party dies. When it comes to trust, the trustee chosen for such an event as disability will manage the finances as per the instructions.
If Heir is a Minor
In case of a will, for the situations where the heir is a minor, a guardian will be appointed, who must file annual reports and get the court’s approval for financial transactions, or the entire money can be kept in Surrogate court custodial account. The heir on turning 18 will get their amount. With trust, the choice of trustee chosen is preferred in appointing any guardian. The trustee manages the property, provides for education, medical care, and maintenance. The entire property is transferred according to the terms mentioned in the trust.
Conclusion
Estate management is one of the major decisions any person takes in their life. Estate planning in California offers various options. Choosing the right way today can help secure your heir’s tomorrow.
