We’ve all watched the scene play out in the movies - a family member has died and the remaining family gathers around while the executor reads the “last will and testament” of the deceased. While not completely false, there’s much more to this scenario than meets the eye.

 

Wills are rarely straightforward as movie scenarios might have you believe. In California, a will basically serves the purpose of determining the executor of your estate, as well as how your assets will be distributed. You can also assign a guardian to your minor children in a will in cases where both parents pass away concurrently. In the state of California, wills often require a hearing in probate court, costing beneficiaries more money, time, and privacy, as the probate of a will is considered public domain.

 

Many people choose to take their estate planning a few steps further and set up a living trust (also known as a revocable trust). Living trusts are set up so that your assets, including any real estate that you own, can be managed for beneficiaries on your behalf. They also enable you to designate someone, a trustee, to manage your assets whether you’ve died or become incapacitated.

 

It’s often assumed that by setting up a living trust (versus a will), you are helping your beneficiaries avoid taxes, but this is a myth. Estates must exceed the minimum $11.7 million (per person) in value in order for taxes to become a concern, whether you have a will or a trust.

 

One of the biggest benefits of having a living trust is that your beneficiaries can avoid probate court. Without a trust in place, a will is subject to a complicated and often very expensive court process. Ultimately, by proactively setting up a living trust, you are saving your loved ones from significant costs and fees, as well as delays associated with probate.

 

We’ve only scratched the surface when it comes to estate planning, but if you have yet to give this thought (other than while watching a movie) - especially as a homeowner and/or parent - you may want to consider making it a priority. Real estate is often a person’s largest asset, taking center stage once you’ve passed away. Estate planning doesn’t have to be complicated, but it does require taking the time to talk with a specialist who can help address your questions and prepare a plan that’s specific to the needs of you and your family. Reach out to us for recommendations - you’ll be glad you did!