IN STATE OF CALIFORNIA
The primary difference between a will and a living trust is that assets placed in your living trust, except in rare circumstances, avoid probate at your death. Neither the will nor the living trust document, in and of itself, reduces estate taxes — though both can be drafted to do this. Let’s take a closer look at each vehicle.
Probate can be advantageous because it provides standardized procedures and court supervision. Also, the creditor claims limitation period is often shorter than for a living trust. However, Probate is almost always more expensive than trust administration and tends to take longer, particularly in California.
1. Notification of interested parties.
- Most states require disclosure of the estate’s approximate value as well as the names and addresses of interested parties. These include all beneficiaries named in the will, natural heirs, and creditors.
2. Appointment of an executor or administrator.
- If you haven’t named an executor, the court will appoint an administrator to oversee the estate’s administration and distribution.
3. Inventory of assets.
- Essentially, all assets you owned or controlled at the time of your death need to be accounted for.
4. Payment of claims.
- The type and length of notice required to establish a deadline for creditors to file their claims vary by state. In California, a creditor is required to file a claim before the expiration of the later of the following times: (1) four months after the letters are issued to the executor or administrator, or (2) 60 days after the date the creditor is served with notice. If a creditor doesn’t file its claim on time, the claim generally is barred.
5. Filing of tax returns.
- This includes the individual’s final income taxes and the estate’s income taxes.
6. Distribution of residuary estate.
- After the estate has paid debts and taxes, the executor or administrator can distribute the remaining assets to the beneficiaries and close the estate