What Should I Do to Ensure My Estate is Handled the Way I Want it to Be?
Estate planning is vital for ensuring that your assets go to the beneficiaries of your choice in the amounts of your choice. There are many tools in the estate planning toolkit that can help secure your estate. There are two broad categories of options, each with pros and cons. People often combine various options to fully protect their estate as much as possible. These fall into the categories of wills and trusts.
Wills
A will is a legal document that can specify how an estate can be handled upon the owner’s death. How well it might work for you depends on your situation and response to the pros and cons listed.
Pros:
- Wills are usually easier to draw up, less costly, and simpler to change if priorities shift over time.
- It’s a crucial document for parents of minor children to have a will, as that alone can name a legal guardian.
Cons:
- Wills must go through probate court. That can slow down the distribution of assets and potentially cost the estate more money.
- Probate is a public process, meaning the general public can learn the terms of the estate and its beneficiaries.
- Wills can only address assets owned by the person who drew up the will, not life insurance or assets that name a beneficiary.
- Wills likely won’t protect beneficiaries from claims from creditors or lawsuits.
Trusts
This is a large category with multiple types of trusts that are designed for different functions. In most cases, people transfer the ownership of their assets to the trust and appoint a trustee to oversee it. That’s a very basic description of a complex area of estate planning, so contact an experienced estate planning attorney for specifics on what types of trusts might be valuable for your estate.
Pros:
- Distributing assets from a trust is usually easier because anything in the trust doesn’t go through probate.
- Depending on the type of trust chosen, it may be flexible and allow changes as time passes and priorities change.
- A trust can allow assets to be distributed over time rather than as a lump sum, as a will would. This can be beneficial when the recipient is someone who, for example, is financially irresponsible and may not be trusted to handle a lump sum well.
- Some types of trusts may provide protection against creditors and lawsuits.
Cons:
- Trusts are more complex to set up and involve considerable paperwork to legally change ownership from the original owner to the trust.
- The up-front costs are usually higher than a will because of the complexity and time involved in setting them up.
- Trusts can’t designate legal guardians to orphaned minors. Only a will can do that.
What Happens When Someone Dies Without at Least a Will?
This is a situation known as dying intestate, and it has the potential to lead to all sorts of unwanted consequences. California has strict guidelines for how assets should be distributed when someone dies without leaving instructions for those assets. In general, the assets would be divided among close surviving family members, such as spouses, children, parents, siblings, or sometimes grandchildren. If none of these close family members are living, more distant relatives (including aunts, uncles, nieces, and nephews) may be in line to share the estate. However, the assets usually go to the state if no family members can be found.
There are a few problems with this. The probate court will likely divide the estate according to the familial relationship the survivors had with the deceased.
However, the estate’s owner may want some family members to receive a more significant portion of the inheritance or some to receive nothing, or they want to give assets to friends or nonprofit organizations. None of these things happens if the estate’s owner dies intestate.
Another concern with dying without a will is that the court becomes responsible for naming a legal guardian for orphaned minors–and the guardian may not be the estate owner’s first choice.
What Are Revocable vs. Irrevocable Trusts?
When estate planning turns to trusts, there are many types to choose from. One important decision involves whether the trust should be revocable or irrevocable.
Revocable Trust
As the title implies, a revocable trust is one which can be modified or canceled. This makes them flexible and allows the estate’s distribution to be changed as circumstances dictate. Once set up, it’s usually easy and inexpensive to make changes.
However, this type of trust doesn’t provide protection from creditors, nor does it offer estate tax benefits.
Irrevocable Trust
Once an irrevocable trust is created, it usually can’t be changed or canceled. However, it may be assessed lower estate taxes and protect the estate from creditors.
To determine which is right for you, speak with an estate planning attorney.
What Should I Do if I Need to Begin the Estate Planning Process?
Call the King Law Office as soon as possible at 530-221-2640 to set up a free consultation. Every estate is unique, and there’s no one-size-fits-all approach to planning for the transfer of your assets to your beneficiaries. We can go through the specifics of your estate and help determine the best approach to protect your assets and ensure they’ll transfer smoothly to the beneficiaries you choose. We understand how important this is to you and will work with you to achieve the best possible outcomes.