Iwanami Law Office

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Your local law firm.Wills & Trusts

How Does a Living Trust Work?

Probate is a court procedure where an agent (administrator/executor) is assigned to distributed the deceased's property in accordance with an existing will and/or probate law. California law provides the priority as to who inherits what in the event the deceased passed away without will or other estate planning tools. Under probate, when a person passes away, the deceased's property is automatically moved to the deceased's "estate". Since the deceased no longer exist, s/he can no longer hold property. Estate is a legally created entity which can hold property. The administrator/executor will then distribute the estate.

The number one reason to create a living trust is to avoid probate when the property passes. How living trust can avoid probate is pretty simple.

Living Trusts

A Living Trust is also a legally created entity which is designed to hold property. The creator's, or "settlor's", property is then transferred to the Living Trust. A Living Trust is managed by a trustee. A Living Trust is like a company, and a trustee is CEO/COO of the company. When the settlor passes away, the Living Trust continues to survive, by simply replacing the trustee. Much like a company continues to exists despite changes of the CEO/COO. Thus, there is no need to appoint an administrator/executor and no need for the court's supervision.

A Living Trust also can save money. A living trust costs $2000-$3000 to create, where a simple probate procedure typically costs $20,000 - $30,000. An investment of creating a living trust now, could save probate costs. Iwanami Law Office assists clients to choose the most suitable trust among a number of different types of trusts and executes all necessary paperwork.


The differences between a Will and a Living Trust are:

  • A Will becomes effective at the time of death.
  • A Will could make arrangement regarding matters other than assets, such as funeral arrangements or appointing minor child(ren)'s guardian.

Whether a will is needed, or how it should be drafted, depends on the person's life style and status. We assist our clients with deciding what would be "the best Will" for them.

Living Wills

Living Will is also called Advanced Health Care Directive (AHCD). This is a form of Power of Attorney and address ones wishes regarding life support and other medical decisions in the event that one lacks the ability to make his/her own medical decisions. Expressing one's wishes in an AHCD will reduce the burden on the family during a difficult time.