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Which are better, wills or trusts?

Nobody would likely claim that estate planning is fun. However, as much as you may dislike thinking about your own eventual passing, you probably know that estate planning is for the good of your loved ones, so you are starting to consider it anyway. But with such a vast array of options available to you, where do you start?

An estate planning attorney can help offer insight into which strategies are best in your individual situation, but two of the more common and recognizable options are wills and trusts. You may be wondering, though, what the main differences between the two are and which one is better for you and your family.

What is a will?

A will is also known as a "last will and testament." It is a legal document that records your final wishes on how you want your estate to distribute your assets after death. After you pass away, a court will read your will and make sure the instructions within are carried out.

What is a trust?

Essentially, a trust is a legal agreement between three parties (you as the trust-maker, the trustee and the beneficiary) that outlines what happens to a pool of assets, such as property, investments or cash.

· Trust-maker: (also known as a trustor or grantor) the person who creates the trust agreement

· Trustee: the person (or entity) responsible for overseeing the trust's management

· Beneficiary: the person or people (or entity) who receive(s) the benefits or assets named in the trust

What are some advantages and disadvantages of each?

Trusts are generally more flexible than wills, and usually allow you to exert a greater amount of control over how you want to distribute your assets. With the help of a knowledgeable estate planning attorney, there are ways to set up trusts that allow you and your beneficiaries to sidestep certain taxes. Additionally, one major benefit is that trusts avoid probate, meaning they do not become a part of public record. However, trusts can be much more complicated and expensive to set up, and more time consuming to keep updated.

Wills, on the other hand, are much simpler and usually significantly less expensive. They are also easier to alter should anything change before your death. In addition, wills allow you to stipulate your wishes for funeral arrangements, something that trusts do not cover. However, wills do have to go through the probate process, which not only may be both time consuming and costly, but also opens up the opportunity for someone to challenge them.

So which is better?

As you probably guessed, the answer to the question of whether a will or a trust is better is "neither." Or, more specifically, a will or a trust - or sometimes even both! - may be better for you, depending entirely upon your own personal situation and circumstances. A California estate planning attorney - especially one with in-depth tax knowledge and experience - will be able to work with you to evaluate your personal situation and help determine which approach or strategies best suits your needs.

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