Putting your estate matters in order provides peace of mind about the future of your family. Wills and trusts are the most common tools used to express a person’s wishes and preserve wealth for their descendants.
Wills and trusts specify how your assets will be distributed when you pass away. A will details who is authorized to administer the estate and how assets should be distributed. Having a will can help to simplify the process for the beneficiaries. If you have specific ideas regarding how your assets should be distributed, it should be specified in advance in a will or trust.
Wills dictate who will receive specific property, how minor children should be cared for, charitable bequests, and more. Though many people believe that the establishment of trusts alone can transfer assets, avoid probate court, and ensure a smooth transfer of wealth with minimal tax liability, we advise that everyone should also have a will.
In California, if you die without a will, you are considered “intestate,” and a legal process in the probate court is required to determine who should receive your assets. If you have minor children, a guardian will be named for them during the probate process. In the Sacramento area, probate is a public process, can be very expensive, and can take an average of one year to complete.
Even if you have a prepared will, your estate will have to go through the probate process. An exception exists for “small estates,” i.e., estates with less than $166,250 gross value. Probate costs are based on the gross value of the estate, not the net value after payment of debts, attorneys fees, executor fees, and other probate expenses. The advantage of a probated estate is that the person left in charge of your estate (your Executor), is supervised by the court, and is required to give proper notice to all persons who have an interest in your estate.
A revocable living trust is a popular estate planning tool that has some advantages over a will. Like a will, you appoint somebody to be the administrator of your estate when you die, but you can remain in complete control of your assets while you are alive by designating yourself trustee of your estate. The person appointed to manage your estate after you die is the successor trustee. You can place your assets in control of the trust while you are alive. Like in a will, you name the beneficiaries who your assets will pass to upon your death. You can modify the trust or completely revoke it in the future. Should you become incapacitated, appropriate arrangements can be specified in your trust document or other estate documents. After your death or incapacitation, your successor trustee is in charge.
If all your assets have been transferred into the trust, it is very likely that probate court can be avoided completely. A revocable living trust provides the advantage of privacy, as opposed to probate because the trust documents that convey your assets just do not enter the courthouse. Assets, their amounts and who they pass to remain private information and not a matter of public record.
Remember that if you have neither a will nor a revocable living trust, it is likely that a judge and the State of California will control the distribution of your assets. Contact our office for assistance in creating wills and trusts that reflect your wishes.