One of the most common questions in estate planning is whether you need a will, a living trust, or both. While both documents help you distribute your assets after death, they work very differently. Understanding these differences is crucial to choosing the right estate planning strategy for your California family.
What Is a Will?
A will (also called a "last will and testament") is a legal document that specifies how you want your assets distributed after your death. It only takes effect when you die and must go through probate court to be executed.
What a Will Does
- Names beneficiaries to inherit your property and assets
- Designates a guardian for minor children
- Appoints an executor to manage your estate
- Specifies funeral and burial preferences
- Creates trusts for minor children or special needs beneficiaries
What Is a Living Trust?
A revocable living trust is a legal entity you create during your lifetime to hold and manage your assets. You transfer ownership of your assets into the trust, but you maintain complete control as the trustee. When you die, your assets pass directly to your beneficiaries without going through probate.
What a Living Trust Does
- Avoids probate court entirely (your primary benefit)
- Provides privacy—trust documents remain private, unlike wills
- Allows immediate asset distribution to beneficiaries
- Manages assets if you become incapacitated
- Handles out-of-state property without multiple probate proceedings
- Reduces estate settlement costs significantly
Key Differences: Side-by-Side Comparison
| Feature | Will | Living Trust |
|---|---|---|
| Probate Required? | ✗ Yes (9-18 months) | ✓ No |
| Privacy | Public record | Private |
| When Effective | Only after death | Immediately |
| Incapacity Protection | ✗ No | ✓ Yes |
| Initial Cost | Lower ($200-500) | Higher ($1,000-2,500) |
| Overall Cost | Higher (probate fees 2-4% of estate) | Lower (no probate) |
| Time to Distribute Assets | 9-18 months | Days to weeks |
| Contestability | Easier to contest | Harder to contest |
| Guardian for Minor Children | ✓ Yes | ✗ No (need will too) |
| Out-of-State Property | Requires multiple probates | Single process |
Understanding California Probate
Probate is the court-supervised process of administering a deceased person's estate. In California, probate is particularly expensive and time-consuming, which is why many families choose living trusts.
The Real Cost of Probate in California
California probate fees are set by statute and based on the gross value of your estate (before debts):
- • $500,000 estate: $13,000 in probate fees
- • $750,000 estate: $18,000 in probate fees
- • $1,000,000 estate: $23,000 in probate fees
- • $2,000,000 estate: $43,000 in probate fees
Plus: Court filing fees, publication costs, appraisal fees, and other administrative expenses.
Timeline: 9-18 months (or longer if complications arise)
Who Should Have a Will?
A will may be sufficient if you:
- Have a small estate (under $184,500 in California for 2024)
- Own very little real estate or no real estate
- Are young with few assets but want to name guardians for children
- Can't afford a trust right now but need something in place
- Plan to rely on beneficiary designations and joint ownership
Who Should Have a Living Trust?
A living trust is recommended if you:
- Own real estate in California (even if you have a mortgage)
- Have assets exceeding $184,500
- Own property in multiple states
- Want to avoid probate delays and costs for your family
- Value privacy and don't want your estate becoming public
- Want incapacity planning built into your estate plan
- Have a blended family with complex distribution wishes
- Are concerned about potential will contests
Do You Need Both?
Many people benefit from having both a living trust and a "pour-over will." Here's why:
The Complete Estate Plan
Living Trust
Holds all your major assets (real estate, bank accounts, investments) and avoids probate
Pour-Over Will
Acts as a safety net to "pour over" any assets you forgot to put in the trust. Also names guardians for minor children (trusts cannot do this).
Financial Power of Attorney
Handles assets not in the trust and provides additional protection
Advance Healthcare Directive
Covers medical decisions and end-of-life wishes
Common Misconceptions About Living Trusts
❌ "I lose control of my assets"
False. As trustee of your revocable living trust, you maintain complete control. You can buy, sell, or transfer assets freely.
❌ "Living trusts provide tax benefits"
False. Revocable living trusts don't reduce taxes. You file the same tax returns. The benefit is avoiding probate, not reducing taxes.
❌ "Living trusts protect assets from creditors"
False. A revocable living trust doesn't protect your assets from creditors or lawsuits. You'd need an irrevocable trust for that (which has different trade-offs).
❌ "Once you create a trust, you're done"
False. You must fund your trust by transferring assets into it. An unfunded trust is useless. Also update it when life circumstances change.
The Bottom Line
For most California homeowners and families with moderate to significant assets, a living trust offers substantial benefits that far outweigh the initial cost. The probate savings alone typically exceed the cost of creating a trust many times over.
However, a will is better than nothing. If you can't afford a trust right now, start with a will and work toward creating a trust as your financial situation improves.
Need Help Deciding? We Can Help
By The People® can help you create a will, living trust, or complete estate plan at a fraction of attorney costs. We serve San Luis Obispo and Santa Barbara Counties with professional, affordable document preparation.