It may surprise you to learn a simple will is not enough for most in San Diego. Some people think that since they have a will all of their assets will be distributed according to their wishes as a simple transaction. Unfortunately, things are rarely that simple and wills are usually only the best choice for individuals with a small estate, under $100,000 in California, and no real property.
What are a few of the reasons why a simple will is not enough for most in San Diego from the perspective of estate planning:
- Probate: A will must be filed with the court and puts the distribution of your assets into the hands of the probate court. Further, probate fees are set by statute in California as a percentage of the gross value of the estate. An estate worth $500,000, which is not a large estate given California home values, would have to pay attorneys’ fees of $13,000. If the executor does not wave his or her fee, the estate would pay another $13,000. This would mean that the beneficiaries would lose $26,000 that could have been part of their distribution. The cost of paying our legal team to create a trust and a basic yet comprehensive estate plan is a bargain compared to paying $26,000 in the future.
NOTE: The average home in San Diego far exceeds $500,000. Probate is not based upon the equity in the asset, the costs are based upon the value of the asset, regardless of underlying encumbrances.
- Privacy: Another downside to probate is that your will is filed with the court and becomes public; however, a trust is a document that remains private.
- Incapacity: A will only takes effect upon your death. It cannot appoint a person to take care of your financial matters should you become incapacitated. Even if you have a small estate, a will does not provide for incapacity.
- Health Care: A will cannot make your health care and end of life decisions known, nor does it appoint an agent to make health care decisions for you. If you do not have a power of attorney for health care or an advance directive and are unable to make medical decisions for yourself, a court may have to appoint a conservator of person at further legal cost and could delay or prevent your beliefs from being followed with regard to your medical treatment. A well conceived estate plan must also include important legal documents such as a Power of Attorney (POA) or Advance Healthcare Directives. A will cannot appoint a person to take care of your financial matters should you become incapacitated, or make medical decisions on your behalf if you are unable to make them for yourself.
- Tax Savings: Trusts can be structured in ways to avoid some estate taxes in ways that wills cannot provide.
A basic estate plan should consist of the following documents: revocable living trust, pour-over will, durable power of attorney for assets, and advance health care directives. A well-conceived estate plan often requires transactional planning to protect your assets and minimize taxation as well.
A simple will is not enough for most in San Diego and will cost heirs and beneficiaries tens of thousands of dollars (not to mention a year or more for most assets to clear the probate process). If you need help reviewing an existing estate plan or developing the best transactional and estate plan for your unique circumstances we invite you to contact Allen Barron or call today to schedule a free and substantial consultation at 866-631-3470.
