Estate Planning is an essential process in California for protecting your family and your legacy. However, Estate Planning happens in many different forms. How can you tell which one is right for you? It all depends on what you want out of it.
Estate Planning is the process of working with an attorney to create a legally-binding plan for what will happen to your remaining belongings and property (known as your estate) and money (known as your assets) after you pass away. Since your Estate Plan is a reflection of your life, it can be as involved or as broad as you would like it to be. Here is an introduction to the two most common forms of Estate Planning:
Wills are considered to be the bedrock of a strong Estate Plan. In a Will, you can dictate what you want to happen to your estate and assets after you pass away. You can be as specific or general as you want to be. You can even choose who you want to distribute those items and at what pace. You can also use a Will to establish emergency guardians for your minor-aged children and set up future healthcare plans for yourself.
When someone passes away, their estate enters into probate. In probate, a state court distributes your estate and assets. If you leave behind a properly created and maintained Will, they will follow your wishes in that. If not, a Judge will decide. The assets you leave behind in a Will will be used to pay taxes and lawyer fees in probate before being distributed to your loved ones. You also must manually update your Will with a local attorney after any major life changes, such as marriage, divorce, children, or moving to a new state.
Trusts are a highly valued Estate Planning method for a few reasons. A Trust is an account that is funded by you and managed by an independent third party. You choose who you would like to receive the contents of the Trust. At the moment of your death, your chosen loved one will inherit the Trust.
Assets (or property) placed into a Trust does not enter the probate process. This means that it is available immediately to your loved ones and is not subject to tax before being given to you. However, Trusts may be more expensive to create than a Will. They also do not offer the extra options that a Will does in making Estate Planning decisions.
Which Do I Need?
Here’s the great thing: it’s not a one-or-the-other type of deal. Plenty of people create a Will for their general estate and then leave specific assets behind in Trusts that will give their loved ones immediate financial help upon their death. People also create handfuls of different Trusts for different reasons. How expensive probate is varies by the size of your estate, so for some families it might just make more financial sense to create a Will and call it a day.
How Do I Get Started?
At Hedtke Law Group, we want to create an Estate Plan that makes sense for you. If you are ready to take the first step and start creating your Estate Plan, contact Hedtke Law Group today! Get a fresh start today!