AVOID PROBATE
Often times people believe that only affluent people need a trust. This is simply not true. If you have assets valued at over $150,000.00, and you have not created a trust, then at your death your estate will go through probate to determine who will inherit your assets. Probate is a court supervised process by which your assets are collected and distributed to those that the court has determined are entitled to inherit your assets. This could mean that your assets will be distributed to heirs that you never wanted to inherit your property. Probate can be very time consuming, sometimes taking as long as a year or more. In addition, probate can be very expensive. Ultimately, the heirs to your estate will pay for the cost of probate by having the probate fees deducted from their inheritance.

CONTROL
A Trust allows you to have more control over how and when beneficiaries will receive their inheritance. For example, you can instruct that a beneficiary receive their inheritance only if they graduate college.

PREPARE FOR INCAPACITY
A trust allows you to plan for incapacity. If you are unable to handle your affairs due to a mental or physical disability, then the person you name as trustee will step in your shoes and manage your trust assets while you are unable to. The alternative would be a court conservatorship which is a public proceeding that can be costly and time consuming.

REDUCE OR ELIMINATE TAXES
A trust can be a useful tool in reducing or eliminating estate taxes.

A TRUST REMAINS PRIVATE
A trust remains private even during the administration of your trust (collection and distribution of your assets after you die).

A Will, also known as a Testamentary Will, allows you to name beneficiaries of your assets as well as appoint a guardian for your minor children. In a Will, an Executor is named. The Executor carries out the provisions of the Will.

At a bare minimum you should have a Will. Although, not as comprehensive as a Trust, a Will at least allows you to determine who will inherit your property and who will be the guardian of your minor children.

If you die in California without a Will, then California laws of succession will determine who will inherit your assets and in what proportion your assets will be distributed. Unfortunately, this can lead to the distribution of your assets to people you would otherwise have left out of your Will. In addition, the court will decide who will act as guardian of your minor children. The court will always try and do what is in the best interest of the children. However, the court may appoint someone as guardian that you wouldn’t have entrusted with your kids.

A Will is similar to a trust in that you can name who you want to inherit your assets. However, there are significant differences between a Will and Trust.

PROBATE
A Will does not avoid probate. Although, you get to determine who will inherit your assets, your Will still goes through the probate court.

NO INCAPACITY PLANNING
A Will does not allow you to plan for incapacity. By law, a Will takes effect at your death. Therefore, there are no incapacity provisions to ensure that your assets will be managed if you become incapacitated.

A WILL BECOMES PUBLIC
A Will becomes public once it goes through the probate process. In contrast, a Trust generally does not go through probate and remains private.

NO CONTROL
Although you can name beneficiaries in your Will, you cannot include provisions stating how and when your beneficiaries will receive their inheritance.

NO TAX PLANNING
A Will does not allow you to reduce or eliminate estate taxes whereas a Trust can.

At a minimum, I recommend that all people who are 18 years of age and older execute a Power of Attorney for Finances and an Advance Health Care Directive.

POWER OF ATTORNEY FOR FINANCES ("POA")
A POA allows you to name an individual, known as your “agent,” to handle your financial affairs in the event that you become incapacitated. The POA gives your agent the authority to pay your bills, manage, dispose of, sell, and convey your real and personal property, and other powers.

You might ask "Well, how is this different then a trust?" At your death, the POA terminates. On the other hand a Trust allows you to prepare for incapacity as well as name beneficiaries of your estate at your death. So for example, if you were in a car accident that left you in a coma, your agent would step in and manage your financial affairs for you. However, if you pass away, the authority of your agent would terminate and if you didn’t execute a Trust, your estate would go through probate to determine who would inherit any assets you owned.

Although it is always wise to create a Trust because it covers so many more scenarios, if for some reason you are unable to execute a Trust or Will, the second best option would be to execute a POA so that you can authorize an agent to act on your behalf in the event that you are unable to handle your own financial affairs.

ADVANCE HEALTH CARE DIRECTIVE ("AHCD")
The AHCD enables the person you choose (“agent”) to “be your voice” with respect to your health care in the event that you become incapacitated. In this document, you can specify your health care wishes (i.e. wishes about life-sustaining treatment, organ/tissue donation, etc.). You can instruct your agent on what treatments or procedures you don’t want performed. You can also list your preference for burial or cremation, and any specific arrangements you may have with a mortuary or funeral home.

At a very minimum, I recommend that all my clients have these two legal documents. These documents will ensure that the person you name as your agent will be authorized to act on your behalf if you are unable to handler your affairs.

However, as noted above, these may not be the only documents you need to better serve you and your family. If you have any questions or would like to discuss options that might benefit you, I’d be happy to meet with you. Please call me at (424) 259-1556 to set up a free initial consultation.