NEARLY 50% OF AMERICANS DIE WITHOUT AN ESTATE PLAN
As an estate planning lawyer, I believe that some of the most important decisions that you can make in life are properly setting up an estate plan so your final wishes are carried out completely as you desire after you can no longer tell anyone, including your family, your wishes and desires.
It is still amazing to me that so many people fail to grasp the stress, anxiety and heartache that will befall their loved ones after they are gone. Then why do nearly half of all Americans die without a will or trust set up? Most likely because the are afraid to think about their death. At your death, not only are your loved ones grieving immensely because you are not here but, if you fail to properly plan your estate, they are left most often dealing with the court and legal system in probate because you died "intestate". Many times there are prolonged legal battles and most often your estate is left reduced, sometimes substantially, by probate and other costs.
What does dying intestate mean?
Dying intestate means that the state law will decide how your property is divided up. Sometimes this will be according to how you would have divided it anyways (without the huge fees and costs being deducted because of intestacy), but many times it is not. In any event who really wants someone else, especially the state, decided how everything you owned is divided anyways.
Should I set up an estate plan? Who or what should I use to set up my estate plan?
If you take away one thing from this article it is to please setup an estate plan.Something is better than nothing generally speaking. There are numerous solutions out there today. There are many online one size fits all programs and online services to help with estate planning. These online services generally are not adequate estate planning devices in my opinion because they are incomplete, often times inaccurate and not custom tailored to your needs based on your specific circumstances. You get what you pay for and if you want your final wishes to be 50% of what you really need or "close enough" then you get what you pay for and may use these services. However, I highly recommend that you visit an estate planning attorney to set up a custom tailored estate plan according to your wishes so that all of your final wishes are covered (Revocable Living Trusts, QTIP Trusts, GRATS, Asset Protection Trusts, Wills, Advanced Healthcare Directives, Nominations of Guardians, Powers of Attorneys, etc.). You would be surprised at how affordable estate planning attorney services are these days.
Will I have to go to probate?
In California (where I practice law), if your estate is valued at over
$150,000.00 or your real estate valued over $50,000.00 you will be in
probate court unless you properly structure your estate plan. Moreover, just because you have a will doesn't mean you will not end up in probate court. In fact if you have just a will, you will be in probate court.
During probate, the court will determine who will
inherit your assets. Also, if you have minor children, they cannot inherit
your assets outright so that the court will assign a guardian of the
minor child’s estate who will “hold” the funds for the minor child in a
blocked account until your children turn 18 years old. Once the children
turns 18 year old, all the funds will be handed over to the child outright.
The court will also appoint a guardian of the person who will care
for your child on a day-to-day basis, and handle their medical,
educational and everyday decisions. If you don’t have a guardian
nomination in place, a judge will determine who will be a fit guardian
for your child.
Living Trust or Will? What is best for me and my family?
A will is a legal written document that indicates how
your property will be distributed at the time of your death. Your will is revocable and may be amended at any time during your lifetime. A will also allows you to appoint a guardian for your minor children (if any). With an estate plan of only a last will and testament you are guaranteed a visit to probate court.
A living trust is a legal document that can, in some cases, partially substitute for
a will. With a revocable living trust (also known as a revocable inter
vivos trust or grantor trust), your assets are put into the trust,
administered for your benefit during your lifetime and transferred to
your beneficiaries when you die—all without the need for court
involvement.
Most people name themselves as the trustee in charge of managing
their living trust’s assets. By naming yourself as trustee, you can
remain in control of the assets during your lifetime. In addition, you
can revoke or change any terms of the trust at any time as long as you
are still competent. (The terms of the trust become irrevocable when you
die.)
In your trust agreement, you will also name a successor trustee (a
person or institution) who will take over as the trustee and manage the
trust’s assets if you should ever become unable to do so. Your successor
trustee would also take over the management and distribution of your
assets when you die.
A living trust does not, however, remove all need for a will.
Generally, you would still need a will—known as a pour over will—to
cover any assets that have not been transferred to the trust.
Are there any benefits to a living trust?
There are many benefits of a trust. the most important one is that you can setup your wishes just like you desire and generally avoid probate. Avoiding probate can save your estate and your loved ones stress, headache and
both time and money. Also avoiding probate keeps these things private instead of becoming a public record. A trust can also minimize or eliminate estate
(death) taxes. And, it allows you distribute your assets to your
beneficiaries at varying times according to your final wishes, instead of
outright. Moreover, it protects you from court involvement during incapacity
(conservatorship).
Conclusion
This article hit on basic estate planning techniques only and is not legal advice. It is for general informational purposes only. It does not address all the intricacies associated with last
wills and living trusts or your specific needs and desires. Consulting with a competent estate planning attorney, such as Schaefer & Associates, can help
you make the right decision. If you are ready to create a last will or living trust please feel free to contact us today about our living trusts, wills and complete estate planning services.
