Surprisingly, Prince didn’t have a will. Unfortunately, about half of all Americans don’t either.
Is dying without a will—called dying intestate—an issue? If you have possessions you wish to give to certain people, or monies you want to donate to a particular cause, it can be a big issue. When you die intestate, state law determines how your assets are distributed; your wishes are not taken into account.
To avoid this situation, it’s important as part of your estate plan to have either a will or living trust in place. A will, also called “last will and testament,” is a legal document that details your final wishes, is subject to probate, and takes effect and becomes public after your death.
Unlike a will, a living trust can take effect while you’re still alive, remains private, and doesn’t require probate proceedings. You, as the trustee, can transfer your property into a living trust while alive and continue to manage the property (sell, exchange, invest) in the trust. The trust names successor trustees, who can take over your living trust at the time of your death or if you become incapacitated. However, if you don’t have someone you feel you can trust as the successor trustee, an option is a professional fiduciary. (Visit the California Professional Fiduciaries Bureau website at www.fiduciary.ca.gov to learn more about professional fiduciaries and the services they can provide.)
In general, a living trust is more expensive to set up than a will; the cost depends on the complexity and size of your assets and investments, as well as where you live. If your estate is complex, it may be worthwhile to go with a living trust versus a will, and avoid the State’s probate process. However, be aware that California does have a simplified probate process for small estates (under $150,000); in that case, you may want to opt to use a will.
Although estate size and complexity are two important factors to consider when deciding whether to go with a will or a living trust, consult a qualified estate attorney or other qualified and reputable financial and estate planner on the best choice. Visit the State Bar of California (State Bar) website for a list of certified estate planning specialists referral services: www.calbar.ca.gov/lrs or call the State Bar at (888) 460-7364.
Obviously, if you die without an estate plan, you won’t be around to worry about probate and expenses—but think about what your loved ones will have to go through. Spare your family a great deal of stress, time, and money by having one in place that works for everyone.