Estate planning secures your legacy, but your options may seem confusing. In the San Francisco Bay Area, when you prepare any estate planning document, you should be advised and guided by a San Jose estate planning attorney.
It’s not unusual to think that only the affluent and wealthy need to prepare an estate plan, but if you own a home or a business in Northern California, or if you have loved ones who count on you, discuss your estate planning needs with a San Jose estate planning lawyer.
What does effective estate planning entail? Should you set up a trust, or is a will sufficient for your family’s needs? Can you revise your estate plan as your circumstances change and the years go by?
How Do Trusts and Living Wills Differ?
Living trusts and wills are popular estate planning tools. While they convey how you want your assets distributed after your death, they function differently. Knowing the differences between living trusts and wills can help you decide what is right for you and your family.
A will becomes active only after your death. A living trust is a legal entity you create and fund during your lifetime. It handles your assets privately while you are alive and after you pass away.
The Last Will: The Foundation of an Estate Plan
Your will designates your executor, communicates your wishes for the distribution of your assets, and names a guardian for any minor children. A will’s advantages include:
- Simplicity: Drafting a will is usually simpler than preparing and maintaining a trust, which makes wills a popular choice.
- The cost: If your estate is modest, the cost of a will is considerably less than that of a living trust.
- Guardianship: A will can designate a guardian for your minor children. Guardianship is often the most compelling reason parents create a will, as it ensures their children will be cared for by someone they choose.
- Flexibility: You can change or rescind a will whenever you choose. Your San Jose estate planning lawyer can draft a simple codicil (amendment) to revise specific provisions without having to rewrite the entire will.
What Are a Will’s Disadvantages?
The disadvantages of a will include:
- Probate: A will is subject to the time-consuming and costly probate process, which can last months or longer and consume a substantial portion of your estate in administrative and legal fees.
- A lack of privacy: Probate is a judicial process. The details of your will become a matter of public record, meaning anyone can learn about your assets and who received them.
- A lack of incapacity planning: A will offers no provisions for managing your affairs if you become incapacitated. You would also need a durable power of attorney, which designates someone you trust to make financial decisions on your behalf.
The Living Trust: A Tool for Privacy and Incapacity Planning
After you transfer your assets to a living trust, you remain in control of the assets and name a successor trustee to handle the assets after your death or if you become incapacitated. The advantages of a living trust include:
- No probate: A living will bypasses probate, allowing for a faster distribution of your assets. The successor trustee can begin managing and distributing assets immediately, without a probate court’s interference.
- Privacy: Since a living trust is not subject to probate, the details of your estate will not be part of the public record. Privacy is a significant benefit for those who want their family’s financial information to stay confidential.
- Incapacity planning: If you become incapacitated, your living trust’s successor trustee can manage your financial affairs immediately and without a court-appointed conservatorship.
- Greater control: A living trust gives you more control over when and how your beneficiaries receive their inheritance.
What Are a Living Trust’s Disadvantages?
The disadvantages of a living trust include:
- Higher initial cost: A living trust is more complicated and thus more expensive to establish than a will. The costs typically include fees for transferring asset titles.
- Funding: A living trust is effective only if you fund it by formally transferring ownership of your assets into the trust. This means changing your home, vehicle, and bank account titles.
- Maintenance: You must ensure that all assets are in the trust’s name throughout your lifetime. This requires more effort than a will, which simply lists your assets.
Making the Right Choice
A living trust lets you decide how your estate is handled during your lifetime and after your death, but a will is a perfectly suitable and essential document for many people, especially those with modest estates and the desire for a simple estate plan.
A living trust may be a better option if you have a larger or more complicated estate, own real estate in several states, or place a high value on privacy. It offers more comprehensive protection and control, especially in the event of incapacity.
The most effective estate plan often includes both a living trust and a will. The will ensures that any assets accidentally left out of the trust are added upon your death and distributed according to the trust’s terms.
Who Should Help You Plan Your Estate?
Let a San Jose estate planning attorney help you understand which documents you need. Whether you are affluent or your assets are modest, if you own a business or a home, or if others count on you, you should prepare an estate plan.
Keyes Law Group can prepare a living trust, a will, or a comprehensive estate plan for you and your loved ones. We can help you manage a living trust and change your estate plan as needed. We also help families understand and navigate the complicated probate process.
To begin the estate planning process now, or to learn more, call 408-443-2397 to schedule your first consultation with an estate planning professional at Keyes Law Group. We help our clients and their families prepare for the future.
