Sunday, September 7, 2008

Why Proper Estate Planning Is So Important

I Already Have a Will, What Else Do I Need?

Many people are proud to say they have a Will already set up, but why is this not sufficient for estate planning?

Contrary to what most people believe, a Will doesn’t avoid probate, in fact, it guarantees probate. A Will must be verified by the probate court before it can be enforced. Another problem with a Will is that it can only go into effect after you die. But what if you become physically or mentally incapacitated?

What is probate? Probate is a court process required when you die to assure debts are paid and assets are distributed according to your Will. Assets are frozen during this process, and in California it can take from 6 months to 2 years! If you own property in more than one state, there may be a probate in each state. You must also pay probate fees to an attorney/executor in the amount of 5% of the gross value of your estate! Another problem with going into probate is that, during the probate period, the public is able to see what you owned and who your creditors were etc.

A Living Trust is similar to a Will in that it includes the instructions for what you want to happen with your assets when you die. But unlike a Will, a Living Trust avoids probate at death, and also prevents the court from controlling assets at incapacity. A trust simply transfers assets from your name to the name of your trust, which you control. The trust then owns your assets and you designate a back up trustee to handle your trust (according to your instructions). Upon your death, since your assets are “owned” by the Trust, there is nothing to probate.

Here are a few of the advantages of using the Living Trust over the Will:

    * Avoids probate at death
    * Avoids multiple probates if you own property in more than one state
    * Prevents court control of assets at incapacity
    * Provides maximum privacy
    * Allows quick distribution of assets
    *Assets can remain in Trust until beneficiaries reach the age(s) you want them to inherit
    * Can reduce or eliminate estate taxes
    * Can be changed or cancelled at any time
    * Difficult to contest
    *Can protect dependents with special needs

But one question I have is: what if I’m single with no children? Would it still be better for me to use a Revocable Living Trust instead of a Will?

No comments:

Post a Comment


blogger templates | Make Money Online