Difference between a Will and a Trust
One notable difference between a will and a trust is that a will goes into effect only after the death of the party, while a trust takes effect as soon as it is created. A will is a document that directs who will receive a property upon death, and it appoints a legal representative to carry out these wishes. By contrast, a trust can be used to begin distributing property before death, at death, or afterwards. A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm) called a "trustee" holds legal title to property for another person called a "beneficiary." A trust usually has two types of beneficiaries: one set that receives income from the trust during their lives. and another that receives whatever is left over after the first set of beneficiaries has died.
A will covers any property that is in an individual’s name when he/she dies. It does not cover property held in joint tenancy or in a trust. A trust, on the other hand, covers only property that has been transferred to the trust. In order for property to be included in a trust, it must be put in the name of the trust.
Another difference between a will and a trust is that a will passes through probate. That means a court oversees the administration of the will and ensures the will is valid and the property gets distributed the way the deceased intended. A trust passes outside of probate, so a court does not need to oversee the process, which can save time and money. Unlike a will, which becomes part of the public record, a trust can remain private.
Wills and trusts each have their advantages and disadvantages. For example, a will allows one to name a guardian for children and to specify funeral arrangements, while a trust does not. On the other hand, a trust can be used to plan for disability or to provide savings on taxes. Please consult an attorney for how best to use a will and a trust in estate planning.
NOTE: This information is not intended as a complete guide regarding property tax laws. Information here has been derived in part from written and oral opinions from the California State Board of Equalization.