(Originally published Sept. 2013)
UNDERSTANDING WILLS AND TRUSTS
WHAT IS A WILL?
Most of us have heard the term “Will” or “Last Will and Testament” but many don’t know what that exactly means. A Will is simply a document in which you designate who will get your real and personal property upon your death and who will administer your affairs during the process. As such, it is a basic building block of estate planning. If you should die without making such a designation (legally called “intestate”), the laws of the State of California will determine who gets your property regardless of what your unwritten intentions may have been (California does not recognize “oral wills”). All persons related to you through blood or marriage have a claim at law on your estate property including all of your children (natural, adopted, illegitimate, etc.) and their successors if predeceased. Furthermore, if you desire to intentionally omit providing for any child, you must state this intent. In a Will you also designate who should be the Guardian of your minor children.
ADVANTAGES OF A WILL
Creating a Will is a relatively easy matter. You state in writing and in the presence of several witnesses who you want as an administrator and who you want to get your assets when you die. Many low-cost programs and forms are available for this purpose or we can do this for you.
DISADVANTAGES OF A WILL
The biggest disadvantage is that all Wills must be confirmed by a Probate Court. As I described in last week’s Article, this Probate process is generally expensive, time-consuming, and open to the public to see. If your objective is to pass your assets on to your heirs and other beneficiaries as intact as possible, the Probate process will take a chunk out of what you are leaving them.
HOW CAN I AVOID THESE COSTS AND DELAYS?
The easiest way to avoid these costs is through the use of a Revocable Living Trust.
WHAT IS A REVOCABLE LIVING TRUST?
A Revocable Living Trust is a legal entity that you create on paper to hold your assets for you. In other words, the Trust owns your real estate, your personal property, and your investments. It is called “revocable” because you can change it or even terminate it at any time during your life. It is called “living” because it is created and operated while you are still alive. And it …read more