Living Trust

Will or Trust? Guest blogger Jennifer Cowan

This week Marin based estate planning attorney Jennifer Cowan shares her thoughts on the important question of wills vs. trusts. Estate planning is an important component of your overall financial picture. If you haven’t thought about what happens to your stuff when you die…you need to see an estate planning attorney. 

One way we provide for our family is to have current, up-to-date estate planning documents. Having all the necessary documents in place means our wishes are given full effect at a time of loss and uncertainty. Begin by carefully considering what your wishes are for your assets at your death, and then call me to discuss how to make sure that your wishes are legally binding. When you do so, your loved ones are not left with a confusing situation to sort out and make sense of at an already difficult time.

This month I will discuss the documents for transferring assets; next month I will discuss the documents necessary if you were to become incapacitated, even temporarily. The transfer of your assets at your death is generally accomplished through a will or a trust. Why would you choose a trust over a will?

Wills must be probated; probate can be time consuming and expensive. It is a public process as well. The probate court supervises the administration, or probate, of your estate. Probate fees are based on the value of your assets. Fees run about $4,000 on the first $100,000 of assets and $23,000 on the first million of assets (and on from there). The probate process can take a year, two, or more, before assets are finally distributed.

To avoid probate and the probate process (fees, delay and public disclosure) many people opt for a trust. A trust bypasses the probate process and allows more control over distribution of your assets. A trust has much more flexibility. For example, assets may be set aside to pay for college over time, or support a spouse until his or her death and then allow the assets to go to children of a prior marriage.

So avoiding probate means that you avoid the disadvantages that are associated with probate. People who want to avoid probate or who want more control over distribution of their assets often set up a revocable trust.While you are alive, you are typically the named trustee, and you can revoke or amend the trust, transfer assets, and generally continue as before. The trust is fully revocable until your death, at which point it becomes irrevocable. You name successor trustees, people you trust to administer to your estate, or act on your behalf if you become incapacitated. You also name beneficiaries, those people you want to receive your assets when you die.

A revocable trust provides detailed instructions for the management and transfer of property without going through probate. At your death, the person you have named as your successor trustee will carry out your instructions in the trust: when the property will be distributed and to whom. With a trust you provide a clear roadmap to be followed at your death with a minimum of expense and uncertainty.

Talk to Jennifer about which option is best for you.

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