Hello, everybody. It's time for a whiteboard lesson. My name is Robert Mansour, and I'm a lawyer in the Santa Clarita area. And one of my areas of practice is estate planning. So estate planning involves things like wills, living trusts, powers of attorney, healthcare documents, guardianship nominations, a lot of that stuff.
But today I want to talk about a very common question that I get, which is "Rob, what is the difference between a will and a living trust?" And what's the main differences. So let's talk about that briefly. So let's talk about a will. So what is a will? I tell clients that a will is basically a letter to the judge? It says, "Dear Judge, I'm dead. My name is so and so and I am dead. The following people are to get my stuff. My cousin Louis gets this. My cousin Sally gets that. My brother Tommy gets this and my baseball card collection goes to so-and-so." And that's what a will does now, who is in charge of administering the will, who is in charge of that? Somebody called the executor.
Now you can pick who your executors are. Generally speaking, you want to pick one person. And if that person can't do it, then you pick a successor executor, etc. One of the main differences is that a will only goes into effect (as a general rule) only goes into effect after you die. So while you are alive, this thing is not doing you much good. It springs into action after you die. So after you die, your executor says, "Oh, John died. We need to do something. Let's read the will." So they read the will and it says, "Give this to cousin Louie...give this to so-and-so and Sally, etc." So that's what the will is now. What else can you do in your will? You can also give away certain assets. Like we talked about, this goes to this person, this goes to that person, but you can also name guardians for your children - guardianship nominations.
So if you have any minor children, your will is often the place where you might say, hey, if I can't take care of my kids or if I die or whatever the case may be, and I have minor children, meaning children, at least in California, under the age of 18, you can name the people that you want to take care of those kids. And that's where you would put all of that information. Or you can also do a separate guardianship nomination if you want. But a will only goes into effect after you die as a general rule. It doesn't do you much good while you are still alive. Now what's the difference between that and the living trust. Let's take a look at a living trust here - living trust.
Something an individual makes just one person. My name is John. This is my will. A living trust can also be made by one person, but sometimes it's made by two people like a married couple. And essentially it's very similar in nature to the will. Basically it says, you know who you are, what you own and where you want your stuff to go when you die. And the person in charge of your living trust is called your trustee. Now, initially, you're going to be your own trustee. My wife and I are the trustees of The Mansour Family Trust. After I die, my wife will be the trustee of The Mansour Family Trust. And then we will have these people called "successor trustees." These are the people waiting in the wings who are going to mind the store. If my wife and I can no longer do it, or if it's one person, if that one person can no longer be the trustee.
One of the main differences is that this legal tool is effective the day you sign it. Whereas this legal tool, the will, only goes into effect after you die. So it doesn't do you much good while you're still alive. This is a "living" trust living. It's "living" the day you sign it. And so it's kind of like you create your own little corporation that exists that very day and continues even after your death. So a living trust distributes your assets to certain people, etc. The nice thing is that you don't have to go to court to handle this. Oftentimes you have to go to court to handle a will. A judge has to get involved. Now, if you have a very small estate, you may not need to worry about going to court and you can still handle it outside of the court process.
But much of the time you're going to end up in court. A judge is going to be handling the administration of your will, which can take a lot of time and cost a lot of money. Plus this is a public affair. Now the fact that this is in the court system - everybody can know your business and it's a lot easier to contest a will than it is to contest a living trust. Everything in the name of your trust stays outside the court system - all of the assets that are inside the living trust. When I say "inside" the living trust, I mean that the asset's title is changed. So your bank accounts no longer say "John and Mary Smith," - they say the "Smith Family Trust". As for your real estate, it doesn't say "John and Mary Smith." It says the "Smith Family Trust" on the deed. So everything inside the circle avoids the court system.
Why? Because you want to keep your affairs private. You don't want a court getting involved or a judge. Your trustees will handle the distribution of your assets and the handling of your assets per the rules of your living trust. So those are some of the major differences between a will and a living trust. So hopefully that was helpful to you. There are also many kinds of other things that work with living trust. They work in connection with each other, but that's beyond today's lesson. Hopefully this will help you understand the difference between a will and a living trust. My name is Robert Mansour and thank you for watching this whiteboard lesson.