As we grow older, we start thinking about the legacy we will leave behind. Estate planning is not only the first step in establishing that legacy — it’s a crucial one. Nonetheless, fewer than one-third of adults have even a simple will.
Failure to formalize your wishes in regard to your estate leaves those decisions to the probate court after your death. Since none of us know when we will die, it is never too early to make those decisions. Doing so not only provides peace of mind for you but for those you leave behind as well.
At Equal Justice Law Group, Inc., we have been helping clients in Sacramento, California, and the surrounding communities with their estate plans for more than 25 years. We work with clients to determine which tools they need to leave behind a legacy on their terms.
A will is a document that directs where your property goes after your death. You choose an executor to oversee distribution as directed in the will. It also allows you to exclude people, even if they would be beneficiaries under the law of intestate succession.
There are four basic types of wills:
A simple will is the most common. You can designate the distribution of your estate and a guardian for minor children.
A testamentary trust will places some of your assets in a trust and states conditions of inheritance by beneficiaries. These are often used when the decedent has minor children at the time of their death. Different from a revocable or irrevocable trust, this type of trust requires property to go through the will and the probate process.
A joint will is signed by spouses who want the surviving spouse to inherit everything. They jointly make decisions about the distribution of the estate after the surviving spouse dies. Because both spouses sign a joint will, it cannot be revised after one spouse dies.
A living will is not designed to carry out the wishes of a person upon their death but to express those wishes while they are living. Living wills do not go through probate. A living will communicates your wishes regarding lifesaving healthcare decisions and who can make healthcare decisions in your stead should you be unable to do so.
Wills are relatively simple to create and they allow you to name an executor or personal representative to carry out the will’s directions, including how debts and taxes are paid.
Key disadvantages of wills are that they must go through probate and can be challenged in court. Challenges may provoke the court to appoint a conservator to manage the distribution of the estate. Additionally, once in probate court, your will becomes a public document.
A trust establishes a fiduciary relationship between you and the beneficiaries of the trust. You assign a trustee to manage the assets of the trust for the beneficiaries. While you are living and capable, the trustee is often you. You name a successor trustee to assume that role upon your death or incapacitation and to serve that role until all assets of the trust have been distributed according to your wishes.
There are two types of trusts:
A revocable trust, or “living trust,” can be changed while you are alive. For example, you can add and remove assets as you choose.
An irrevocable trust cannot be revised while you are alive without the consent of the trust’s beneficiaries.
A trust is not subject to probate (keeping it private), is protected from court challenges, and avoids any need for a conservatorship.
The major disadvantage of a trust is that you cannot name a guardian for minor or incapacitated children. Trusts can also be complicated to create, depending on the amount and type of assets you have. You must make sure that any titled assets, such as real property and vehicles, are titled to the trust and not to you personally. If they are under your name, those assets will be required to go through the probate process.
There are multiple factors to consider when choosing which estate planning tools are right for you. If you want your estate to avoid probate, potential legal challenges, and retain privacy for you and your beneficiaries, a trust is the best option. However, if you have minor children and you want to be the one who makes the important decision about their guardian, a will is the proper vehicle to do this.
For many people, especially those with young children, having both a will and a trust might be the way to ensure that your wishes are carried out.
Estate planning is highly personal and can be complicated and confusing. Hiring an experienced and knowledgeable estate planning attorney will help you explore your options so you can decide what planning tools are best for you.
You want to know that your estate planning documents are well crafted and executed properly to meet the standards of the law. Having an estate plan will allow your loved ones to grieve without the stress of dividing what you leave behind.
For more than 25 years, our team at Equal Justice Law Group, Inc., has helped hundreds of clients in Sacramento, Jackson, El Dorado Hills, and Placerville, California, gain peace of mind through estate planning. You can take the first step by contacting us to schedule a consultation.
It’s never too early to plan for the inevitable. Call our office today.