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.
Reasons why a will is not enough 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 an attorney to create a trust and a basic yet comprehensive estate plan (usually under $3,000 at most law firms) is a bargain compared to paying $26,000 in the future.
- 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.
- 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, springing durable power of attorney for assets, and advance health care directive. If you are concerned about your basic will or if you would like assistance with estate planning, please contact Janathan L. Allen, APC at 866-631-3470 today for a free consultation.
(This blog may be deemed an advertisement for Janathan L. Allen, APC, a law firm whose attorneys are licensed to practice law in the State of California. Your use of this website and blog does not create an attorney-client relationship between you and Janathan L. Allen, APC. Information on this website should not be relied upon or used as a substitute for consultation with legal, accounting, tax, and/or other professional advisors.)