{"id":469,"date":"2014-02-26T21:12:41","date_gmt":"2014-02-27T05:12:41","guid":{"rendered":"http:\/\/www.westsidemommy.com\/site\/?p=469"},"modified":"2016-02-07T21:05:37","modified_gmt":"2016-02-08T05:05:37","slug":"wills-trusts-planning-for-what-if-part-1-of-4","status":"publish","type":"post","link":"https:\/\/www.westsidemommy.com\/site\/wills-trusts-planning-for-what-if-part-1-of-4\/","title":{"rendered":"Wills & Trusts: Planning for “What if…” (Part 1 of 4)"},"content":{"rendered":"

Before I had a child, I was pretty adventurous.\u00a0 I learned how to scuba dive, went tandem skydiving for a birthday, and even rode and owned a motorcycle because it was on my list of things to do before I die.\u00a0 Now, I have to dismiss that list because I\u2019m a parent. It\u2019s no wonder people become \u201cboring\u201d after they have kids – as parents, we have to make sure we live long enough (at the very least) for our kids grow into adults and are able to take care of themselves.\u00a0 The reality of this set in when my husband and I had to make our will.\u00a0 We talked about the worst case scenario and who would take care of our daughter \u201cif…\u201d \u00a0<\/span><\/p>\n

When responsible for another life, it\u2019s essential to have a will.\u00a0 I asked West Los Angeles Lawyer Steve Araiza<\/strong> to answer some questions I had about wills and trusts for this post.\u00a0 He did such a fantastic job explaining things in detail.\u00a0 There is a lot of important information, so instead of editing it down, I\u2019ve separated it into four parts.\u00a0 I will publish one part each week for four weeks.<\/p>\n

Steve Araiza is a work-from-home dad that says his primary job is taking care of his one year old daughter, Isla.\u00a0 But when he\u2019s not wrangling a toddler he spends his spare time preparing estate plans.\u00a0 He graduated from UCLA Law in 2009 with a specialization in business law, specifically focusing on taxation.\u00a0 After graduating from law school, he worked with Southern California Edison until Isla came along and decided to build his own legal practice.\u00a0 You can find him online at <\/span>www.thinktrusts.com<\/a>.\u00a0
\n<\/span><\/em><\/p>\n

Disclosure: While Steve Araiza is a lawyer, he is not offering legal advice. Posts on legal matters are intended to provide legal information and do not create an attorney\/client relationship.<\/strong><\/p>\n

Part 1<\/h3>\n

Q. \u00a0<\/span>What is the difference between a trust and a will?<\/h3>\n

A.<\/h3>\n

A\u00a0will<\/strong> is a document that lays out your instructions for what is to happen to your property (and potentially to your minor children, and other interests) after your death.<\/p>\n

A trust<\/strong> is a separate legal entity that you create during your lifetime, which holds some of your assets in \u201ctrust\u201d and then immediately begins managing them according to your instructions in the trust document.<\/p>\n

Now let\u2019s look at how these documents function differently at different points in the life of the two documents:<\/strong><\/h4>\n
First, the day after your will or trust is created and fully enacted:<\/b><\/h5>\n

If you only have a will<\/strong>, nothing should really change in your life, except that you now have a will in case the worst happens.<\/p>\n

If you have a trust<\/strong>, then certain assets that you put into the trust are no longer technically under your control; they now belong to the trust and will be managed by the Trustee. You appoint that Trustee when you create the trust, and most clients appoint themselves as Trustee.\u00a0 If you appoint yourself as the Trustee of your own trust, that means that you can still manage your assets, you will just be doing so in the name of the trust.<\/p>\n

\"skullcrossbones\"Now, let\u2019s look at the day after your death:<\/h5>\n

If you only have a will<\/strong>, a process will begin that is called probate.\u00a0 This is a process, overseen by the courts, in which any outstanding debts you have are dealt with and your remaining assets are distributed according to your will.\u00a0 Depending on the complexity of your estate this can be a fairly simple process or it can be complex, but either way it will take time and paperwork before the assets in your estate can be passed on to your beneficiaries.\u00a0 Now, with a trust, nothing really changes, except perhaps the Trustee, because the trust has been in existence since before your death and is a legally distinct entity.\u00a0 The trust will contain certain instructions to be carried out upon your death, and it will begin doing so.<\/p>\n

Q. \u00a0What scenario would one choose a will over a trust, and vice versa?<\/h3>\n

\u00a0A.<\/h3>\n

Generally, if you are not the sole provider for anyone (including: young children, non-working spouse, or elderly relatives) and you have no preference on how quickly your beneficiaries receive your estate then a will would probably suffice.\u00a0 If, on the other hand, you do provide for someone, it is probably worth thinking about how you will continue to help provide for those people during the period after your death but before your estate clears probate.\u00a0 One way may be to set up joint bank accounts, another is life insurance (which still takes time to pay out), but the most versatile method would probably be to set up a trust.\u00a0 Depending on your financial situation, I would probably recommend some combination of all three \u2013 along with a will<\/strong>.<\/p>\n

Which is an important point \u2013 even if you have a trust, you should still have a will.\u00a0<\/strong> This is because there a certain things that have to happen in a will, such as declaring the personal guardian of any minor children, but also because it\u2019s not usually convenient to transfer everything you own into the trust.\u00a0 So even when you have a trust you should set up something called a pour-over will, which essentially states that everything not currently held by the trust should be transferred over to the trust on your death.<\/p>\n

Finally, I\u2019d like to note that trusts are often seen as tax-planning tools, and while that can be true in some cases (especially with multi-million dollar estates) that does not mean that trusts are not also an essential general estate-planning tool for people with smaller estates.<\/p>\n

Special Thanks to Steve Araiza for contributing to this post. \u00a0Please visit him online at\u00a0thinktrusts.com<\/a><\/em><\/strong>
\nCheck-in next week for part 2 of this series!<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Before I had a child, I was pretty adventurous.\u00a0 I learned how to scuba dive, went tandem skydiving for a birthday, and even rode and owned a motorcycle because it was on my list of things to do before I die.\u00a0 Now, I have to dismiss that list because I\u2019m a parent. It\u2019s no wonder […]<\/p>\n","protected":false},"author":1,"featured_media":470,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[906],"tags":[105,102,101,106,104,103],"class_list":["post-469","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-announcements","tag-death","tag-lawyer","tag-resource","tag-taxes","tag-trust","tag-will","eq-blocks"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p46LgQ-7z","jetpack_likes_enabled":true,"jetpack-related-posts":[{"id":633,"url":"https:\/\/www.westsidemommy.com\/site\/wills-and-trusts-planning-for-what-if-part-3-of-4\/","url_meta":{"origin":469,"position":0},"title":"Wills and Trusts, Planning for “What if…” (Part 3 of 4)","author":"westsidemommy","date":"March 12, 2014","format":false,"excerpt":"This is a continuation of\u00a0last week\u2019s informational post on Wills and Trusts, a Q&A with\u00a0Steve Araiza, a lawyer in West L.A. 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