Who do you want to inherit your property? When do you want them to receive it? In what proportions and under what conditions? If you choose not to plan and make these decisions, the State of California will decide for you (this is called intestacy). Your default beneficiaries will be based on whether you were married and who among your descendants or other relatives are still living. Generally, your assets will go to your closest living relatives. No consideration will be given to how close you were to a particular relative. For example, you may not have spoken to your Sister in decades, but have a close relationship with your Sister’s children. Despite your estrangement from your sister, if she is your closest living relative, she will get an inheritance and your nieces won’t.
Property is generally distributed outright in intestacy. This may not be the best option for your heirs, who may not be able to manage the inheritance, may be in the middle of a divorce or bankruptcy, or may be under age. Planning during your lifetime gives you the opportunity to choose your beneficiaries and how they receive their inheritance.
Finally, if you have minor children, you can designate who you would like to raise your children after your death.
What is probate?
Probate is the formal, court supervised procedure to identify all assets owned by a deceased person (a “decedent”), identify the decedent’s creditors and beneficiaries, and the distribution of assets accordingly. Probate is required whether you have a Last Will or not. Because probate is a formal court proceeding, with built-in waiting periods, a simple, uncontested probate can last 9-12 months or more and cost several thousands of dollars.
What is the difference between a Will and a revocable trust?
A revocable trust is essentially a substitute for a Will, and distributes your property in the same manner. However, a revocable trust has the added advantage of avoiding probate, a process which is public, costly, and time-consuming. This is particularly beneficial if you own real estate. The property in your trust will transfer without need for probate.
A revocable trust requires some management during your lifetime. With a trust, you must transfer legal ownership of certain assets to your trust while you are living. Some assets cannot be transferred to the trust, but instead should be “payable upon death” to the trust through a beneficiary designation. As you acquire additional assets, you must be careful to title assets in your trust’s name.
If you have questions about Estate Planning contact us and we can set up a time to meet with you to discuss options that best meet your needs.