This post will be the first of a series in which I cover some common myths and misconceptions about estate planning. Of course, the more clear people are about the basics, the better they�ll understand how best to proceed with establishing an estate plan or reviewing and updating their existing plan.
A considerable number of myths exist about Estate Planning and, in particular, Revocable Living Trusts. Although increased media coverage and a higher level of consumer sophistication have helped debunk many of these misconceptions, I still encounter quite a few. In this post and each of the subsequent posts, I will highlight one or several of the myths and misconceptions that I regularly encounter and provide an educated rebuttal to them.
Myth: If you are not wealthy and you have a Will, you do not need a Revocable Living Trust
Reality: Residents of California who die with or without a Will (but no Trust), and whose assets are valued at more than $150,000 (other than certain kinds of assets, such as automobiles, joint or P.O.D. accounts, joint tenancy assets, and insurance and retirement accounts with named beneficiaries) are subject to Probate. Probate is a public, court supervised estate administration process. It typically takes nine months to a year or longer; requires a great deal of paperwork and hassle; substantial attorneys� fees, executor fees and costs are also incurred.
Revocable Living Trusts are an excellent �Will substitute� in most respects. Note that you should still have a simple �pour-over� Will that accompanies your Trust as a �safety net�. This basic Will can �catch� any assets when you die that may not have been transferred to your trust. Fortunately, all assets in your Trust are simply exempt from Probate under the law.
In summation, Probate is easily avoidable. Trust administration, in contrast to Probate, is generally handled privately; it is much less expensive and much more convenient than Probate; and avoiding Probate usually results in a significantly greater portion of your assets going to your loved ones and a lot less to attorneys, executors, the court and other third parties.
This article is intended to provide information of a general nature, and should not be relied upon as legal, tax, financial and/or business advice. Readers should obtain and rely upon specific advice only from their own qualified professional advisors. This communication is not intended or written to be used, for the purpose of: i) avoiding penalties under the Internal Revenue Code; or ii) promoting, marketing, or recommending to another party any matters addressed herein.
ESTATE LEGAL SERVICES: Need to find an estate planning attorney in Walnut Creek CA? Contact Robert Silverman at 925-705-4474 for legal advice on Revocable Living Trust, Wills, Durable Power of Attorney, Advance Health Care Directive, Special Needs Trusts, and Irrevocable Trusts & Advanced Estate Planning, including Irrevocable Life Insurance Trust (ILIT), Qualified Personal Residence Trust (QPRT), Defective Grantor Trust (IDGT), Grantor Retained Annuity Trust (GRAT), �Crummey Trust�, and various types of Charitable Trusts.