The core distinction between a living trust and a testamentary trust lies in when and how they are created and funded; one takes effect during your lifetime, the other upon your passing.
What are the benefits of a living trust?
A living trust, also known as an inter vivos trust, is established while you are still alive, allowing you to transfer assets into the trust during your lifetime. This offers several advantages, primarily avoiding probate—the legal process of validating a will—which can be time-consuming and expensive. According to a recent study by the American Bar Association, probate costs can range from 5% to 7% of the estate’s total value. Living trusts can also offer greater control over asset distribution, particularly useful for blended families or providing for beneficiaries with special needs. There are two main types of living trusts: revocable and irrevocable. Revocable trusts allow you to maintain control and make changes, while irrevocable trusts offer potential tax benefits but require relinquishing control.
I remember Mrs. Gable, a retired school teacher who came to us quite distressed. Her husband had passed away unexpectedly without a trust or updated will. The estate was tied up in probate for over a year, and her family was battling over the distribution of assets. The emotional and financial toll was immense. She shared, “I just wanted to grieve, not fight with my own children.” It underscored the importance of proactive estate planning—avoiding that nightmare for others is deeply satisfying.
How does a testamentary trust work?
A testamentary trust, on the other hand, is created within your will and only comes into existence after your death. It’s essentially a set of instructions within your will that directs the executor to create a trust with specific terms. Unlike a living trust, assets aren’t transferred into the trust during your lifetime; they pass through probate first and then are distributed according to the trust’s provisions. This can be a useful tool for situations where you want to delay distribution to beneficiaries, such as minors or those who might not be financially responsible. Approximately 33% of Americans die without a will or trust, leading to state laws dictating asset distribution—often not aligning with their wishes. Testamentary trusts also allow for complex distribution schedules or conditions, like releasing funds for education or specific purchases.
What are the costs associated with each type of trust?
The cost of establishing either type of trust varies depending on the complexity of the estate and the attorney’s fees. Generally, a living trust is more expensive upfront, as it requires more initial work to transfer assets. However, it can save money in the long run by avoiding probate costs. A testamentary trust is typically less expensive to create initially, as it’s simply part of the will. However, the estate will still be subject to probate, incurring those associated costs. Many people underestimate the time commitment of probate, which can easily take 6-18 months. A well-structured trust, especially a living trust, minimizes that timeline.
Can a trust be changed or revoked?
The ability to change or revoke a trust depends on its type. As mentioned earlier, revocable living trusts allow you to retain control and make amendments throughout your life. Irrevocable living trusts, however, are more difficult to modify. Testamentary trusts, being part of the will, can be amended by updating your will—but only before your death. We once had a client, Mr. Henderson, who initially created an irrevocable trust to protect assets from potential creditors. Years later, his financial situation changed, and he regretted not having access to those funds. We worked with him to explore all available options, though modifying an irrevocable trust is rarely easy. It highlighted the importance of careful planning and considering potential future changes.
Thankfully, with proper preparation, everything can often work out beautifully. Mrs. Davies, a vibrant woman in her 70s, came to us determined to protect her grandchildren’s inheritance. We established a living trust with a clear distribution plan, specifying how and when the funds would be used for their education. After she passed, the trust seamlessly transferred assets to her grandchildren, avoiding probate and ensuring their financial future. Her family expressed immense gratitude, knowing her wishes were honored without complication. That’s the reward of this work—peace of mind for families during difficult times.
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
family trust
wills
banckruptcy attorney
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/oKQi5hQwZ26gkzpe9
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “How do I talk to my family about my estate plan?” Or “How does the probate process work?” or “How do I make sure all my accounts are included in my trust? and even: “Is bankruptcy a good idea for small business owners?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.