If you provide for your family and you have loved ones who depend on you, if you own a business, or if you have extensive investments, you probably need to speak with an estate planning lawyer and begin the estate planning process. Proper estate planning isn’t done hastily or informally. Do not try to do it by yourself, and don’t wait until it’s too late. If you do not have a will or a living trust and you have not started the estate planning process, the first months of a new year are the time to begin. It’s a different kind of new year’s resolution. Without the distractions of summer and the holidays, it’s a good idea to take care of your estate planning needs early in the year – and then enjoy the summer and the holidays with the peace of mind that the right estate plan can bring.
Estate planning is about making smart and informed choices to guarantee that your instructions and wishes are followed as precisely and as faithfully as possible after your death. Estate planning is not just for the rich and famous – in fact, some kind of estate planning is important for everyone. It’s never too soon to start the process, either – we all know that tomorrow is guaranteed to no one. To begin addressing your estate planning needs, or to have your current plan reviewed or revised – arrange at once to consult with a good estate planning lawyer, and in southern California, with an experienced Orange County estate planning attorney.
When you consider estate planning, the very first choice you face is: Should you have a will or a living trust? While there’s nothing wrong with a will – in fact, it’s the proper estate planning document for a lot of people – many are choosing a living trust because of the advantages that a living trust offers. A living trust is a legal document through which your assets are placed into a trust for your benefit during your lifetime and then transferred to designated beneficiaries at your death by your chosen representative, called a “successor trustee” whose duties are comparable to those of a will’s executor. To create a living trust as an alternative to a will, to revise a living trust or a will, or if you simply need to learn more to decide if a living trust is the right estate planning option for you, consult at once with an experienced estate planning attorney.
Of course, the right estate planning approach will hinge on your own personal and financial situation. For some Californians, a living trust will provide practical, advantageous benefits. For others, there’s no genuine benefit at all to having a living trust, and a will can satisfy all of your estate planning needs. According to the best estimates, only about twenty percent of us in the United States have living trusts. So should you become a part of that twenty percent? You’ll have to determine that for yourself after consulting with an experienced estate planning lawyer. To get you started, consider these four top reasons why some people are choosing living trusts over wills:
1. A LIVING TRUST AVOIDS PROBATE
With a valid will, your estate will go through the probate procedure, which are the court proceedings where your assets are distributed according to your wishes by the executor of your will. In contrast, a living trust is not subject to probate proceedings, and that can mean a faster distribution of your assets to your heirs. With a will, that distribution can take months. But with a living trust, distribution typically takes only several weeks to complete. Your successor trustee pays your debts and distributes your assets according to your instructions. In probate, court fees are subtracted from the “gross” estate (the amount of the entire estate) before any debts are paid. Court fees can often be as high as ten percent of the total estate. With a living trust, you entirely avoid these court costs. A living trust is a stronger legal document than a will in the event that someone legally contests the distribution of your assets. Like a will, a living trust allows you to choose a guardian for your minor children in the event of your death.
2. A LIVING TRUST MAY SAVE YOU MONEY
A living trust may save you money in the long run, although the initial cost will be more than the cost of a will because a living trust is a more complex document, and “writing up” a living trust is only the beginning of what a living trust requires. You must transfer your assets such as bank accounts, stocks, and certificates to the trust through separate paperwork. It’s a process that requires several stages. Living trusts may in some cases provide savings on income taxes and estate taxes for married couples in the form of joint living trusts.
3. A LIVING TRUST PROVIDES PRIVACY
One of the biggest differences between a will and a living trust is the amount of privacy that a living trust ensures. Unlike a will, a living trust is not made available for public inspection upon your death, and a living trust ensures that your estate will be distributed privately rather than in open court. A will, on the hand, is a public record, so all transactions regarding it will be made public as well.
4. YOU NAME YOUR SUCCESSOR TRUSTEE
An additional benefit of having a living trust is that the document allows your successor trustee to take charge immediately if you become mentally and/or physically incapacitated. If you simply have a will without a durable power of attorney, the court will appoint someone to oversee your financial affairs, and that individual will require court approval to pay expenses, to sell property, or to take other actions on your behalf. If you draw up a durable power of attorney for health care decisions, you can avoid having a court-appointed conservator manage your affairs. However, with a living trust, your personally-chosen successor trustee is allowed to manage your affairs without court intervention, and if your incapacity ends – or if you dispute that you are incapacitated – you retain control of the living trust yourself.
WHAT TYPES OF LIVING TRUSTS ARE AVAILABLE?
A living trust is probably the right estate planning document for you if you have considerable and extensive assets, closely-held business interests, children from several marriages, or extensive real estate holdings. By working together with an experienced estate planning attorney to draft a living trust, you can be certain that your instructions and wishes will be carried out precisely as you’ve indicated. The two types of living trusts are:
- Revocable living trusts: With a revocable living trust, you transfer assets into the ownership of the trust, you retain control over those assets, and you can cancel or modify the trust at any time. Assets in the trust pass directly to your beneficiaries at the time of your death without probate. Understand, however, that revocable living trusts do not reduce estate taxes.
- Irrevocable living trusts: An irrevocable trust lets you donate and give away assets as you desire and while you are still alive. Assets that you give away while you are alive will not be subject to estate taxes. An irrevocable trust is appropriate in only the rarest situations, but a good estate planning lawyer will recommend it if it’s the right estate planning option for you.
The best estate planning takes a knowledgeable, experienced estate planning attorney to draft complex and exacting legal and financial papers. Early in the year, for a number of reasons, is always the best time to begin the estate planning process if you do not have a will or a living trust. Sadly, however, far too many of us wait until we are forced by external circumstances to make estate plans in haste, and the results of hasty estate planning can be disastrous.
Should you become permanently incapacitated or terminally ill without an estate plan, a conflict is more likely to emerge among your relatives and beneficiaries, and the court – rather than you or someone you trust – could take over your affairs. It’s imperative to begin the estate planning process now, while there’s not any doubt that you have voluntarily and independently made your estate planning decisions with a sound mind.
WHY RETAIN AN ATTORNEY?
At this point you may be asking yourself: Why retain an estate planning attorney when you can download the forms or buy the blanks from an office supply store? Because your estate plans are too important to risk a mistake or a misunderstanding of any kind. An experienced estate planning attorney deals daily with the typical questions and difficulties that arise regarding estates, so your lawyer can offer you valuable counsel and guidance that you may not otherwise have considered. Experience means that your attorney will be acquainted with all of the potential scenarios that could emerge and even with some estate planning alternatives you may not know about. Take advantage of these first months of 2016. The more you delay, the more imperative it is to begin estate planning. To start the process, or if you want to learn more first, schedule an appointment with an experienced Orange County estate planning attorney without delay. It’s a different kind of new year’s resolution – the kind you’ll want to keep.