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family estate plan 91024

Good Reasons to Establish a Trust (and Being Rich Isn’t One of Them)

Estate Planning Blog, Trusts, Wills vs. Trusts

family estate plan 91024As far as estate planning goes, many people have the misconception that trusts are only for the wealthy while wills are for everyone else. But that couldn’t be further from the truth. You don’t need to live in a mansion or own a fancy yacht to benefit from having a trust. The fact is, a will simply isn’t enough for most of us. Why not? There are many reasons, but one of the biggest is that a will won’t keep your family out of probate.

What is probate? Probate is a court process used to transfer the assets (not held in a trust) of a deceased person to their heirs. In other words, after your death – if you don’t have a trust in place – someone will have to petition the court to open probate so your assets can be transferred to your beneficiaries. A will only serves to guide the court on how to distribute your assets, it does not keep your family out of court.

So why do I want to avoid probate? All assets passing through probate court become a matter of public record, and as such, vulnerable to creditors, predators, and opportunists – and believe you me, there are plenty of scammers and con-artists who read the probate records to identify who is receiving an inheritance so they can go after their next mark. The court system in California is underfunded and overburdened and the probate process can take years to get through. Also, probate is very expensive, ultimately diminishing the overall assets available to your family by a substantial margin. Keep in mind too, if you have minor children the probate court will give them complete, unrestricted control of their inheritance as soon as they turn eighteen. And think about it, the probate process is generally the last thing family members want to endure after losing a loved one. Ultimately, probate just makes a hard time that much harder.

Okay, how do I avoid probate? Avoiding probate is not hard to do. By creating and transferring assets into a revocable living trust there will be no need for probate at your death. In fact, probate is really only for people with little to no assets or for those who, during their lifetime, failed to plan to keep their families out of probate court.

What are the advantages of a trust? Putting your assets in a trust avoids the probate process once you pass away. This saves your loved ones the time, money, and emotional hassles associated with probate. A trust can also be kept confidential which allows families to keep their privacy in the process. Another advantage is that a trust allows you to give your assets to minor children exactly when and how you see fit – they don’t have to become instant millionaires at eighteen if that’s not what you want. Finally, a trust can provide asset protection from your beneficiaries’ creditors, court judgments, divorces, and even their own bad money management practices.

As you can see, there are many reasons to create a trust, and being rich isn’t one of them. You can learn more about how a trust might benefit you and your family by calling us to schedule a Family Estate Planning Session. I’d be happy to sit down with you, talk about your particular situation, and help you make sure things are as easy as possible for your loved ones in the future.

To you family’s health, wealth, and happiness,
Marc Garlett 91024

February 10, 2015/0 Comments/by CaliLaw
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