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Understand the differences between an estate and a trust

On Behalf of | Jul 19, 2023 | Estate Administration & Probate

If you have many assets and live in California, planning for the future is essential. Creating an estate plan ensures that your assets go to chosen beneficiaries. Understanding the difference between a trust and your estate can help you decide how you want your assets distributed.

How to ensure your estate is passed to beneficiaries you choose

When you pass away, your assets will go into your estate. However, if you’re a joint owner of an asset, it will stay out of your estate. An estate is temporary and will not exist after your assets are transferred to the appropriate beneficiaries. Ensuring they go to your chosen beneficiaries requires you to create a legal will. Without one, you’ll die intestate, and your assets will be transferred based on state law, which is why it’s critical to designate who will receive your assets if you want to pass them on to specific people.

Using a trust to transfer assets lets you set specific conditions

You can also use a trust to transfer assets after you die. This legal entity holds and distributes your assets according to your conditions. If you create a trust, you are known as its grantor. After placing specific assets in the trust, it’s managed and overseen by a third party, which is known as a trustee. In the trust, you can name beneficiaries and the terms and conditions they must follow to receive your assets. Unlike an estate, you can establish a trust when you’re alive. It becomes a legal entity on its own and continues after you die.

Setting up a trust may be advantageous if you want to pay college tuition for your grandkids. In it, you can stipulate that the money must go for schooling and nothing else. Knowing the differences between an estate and a trust lets you make the appropriate decisions for distributing your assets.


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