Not everyone needs a Will. In the case of very small estates, it
may be appropriate to own your bank accounts and even your home
‘jointly,’ meaning the accounts and property will transfer
automatically to the surviving joint owner(s). Note that once you add
someone to an account or your property, that he or she can only be
removed with their agreement, in a writing to the bank or in a deed in
which they join in signing. There may be property-tax consequences if
not done properly, and you will not take full advantage of potential
capital gains tax-avoidance for the person receiving the property.
For many people, the main
reason to have a Will is to designate the person that you prefer be
appointed as your personal representative. A Will can also nominate who
you prefer take custody of your minor children, and can even include
provisions for setting up a Trust for the benefit of your children
following your death. A Will is also necessary: when you do not want
your property to go in equal portions to your heirs; if you want to
leave a specific item of property to an individual; to provide for
disproportionate giving; or to include recipients who are not your heirs
at law.
- What
happens if I die without a Will?
Contrary to rumor, the State does not get your property. Dying
without a Will (called ‘intestacy’) results in your property going
to your spouse or heirs. If all of your property was acquired in
California during your marriage it is community property and will pass
to your spouse provided, of course, he or she survives you. Note that
whether or not you have a Will, if you die owning substantial assets or
an interest in real property that does not automatically pass to someone
else when you die, your estate will likely need to be ‘probated’;
a court proceeding by which legal ownership of your assets is
transferred to your heirs and beneficiaries.
If you are not survived by a spouse, your property will go to
your children (or grandchildren in the case of a dead child). If you
die possessed of separate property, such as property you received
before marriage or by inheritance or gift, your children may be entitled
to a portion of it even if you are married at the time you pass away.
- What
is a Revocable Living Trust?
A Trust is considered revocable if it provides that, while you
are alive, you may continue to treat property as your own even though
you have transferred it into the name of the Trust, and you remain free
to amend the Trust or even abandon it altogether and put the property
back into your own name. Typically, a Trust will provide that the power
to revoke or amend is personal to you, and when you die or someone takes
over trust administration duties (the ‘Successor Trustee’) after
you, the original Trustee, are no longer able to continue as trustee, the Trust becomes
irrevocable (no longer amendable). This helps ensure that your wishes
expressed in the Trust are carried out.
Once the exclusive domain of
the wealthy, trusts are now popular with middle-income
families with moderate estates. They are extremely flexible devices that
can be designed for almost every imaginable family situation, such as to meet
the special needs of a disabled individual, protect against rapid
dissipation of wealth by an irresponsible child, or ensure a source of
funds and incentives for a specific objective such as college for
children and grandchildren. A Trust can also provide savings for your
family by avoiding probate-related expenses and maximizing the amount of
wealth that can be passed to the next generation free of estate
taxes. While there are limitations on what a Trust can do, it is mostly
only limited by imagination and can be tailored to meet the needs and
situations of most individuals and couples, including unmarried
individuals.
- Should
everyone have a Trust?
No. As the name implies, it is
important that you have absolute ‘trust’ reposed in the individual(s)
you appoint to carry out your wishes after you are gone or have become
incapacitated, especially since it is intended to avoid the oversight of
a probate court. Appointing an irresponsible person as Trustee will not
transform him or her into a responsible person. Just the opposite,
appointing them in charge of a Trust will likely provide the very
vehicle for them to demonstrate just how irresponsible and untrustworthy
they are.
- If
I have a Trust, will I still need an Advance Health Care Directive
(AHCD)?
Provided you have someone you
trust to make decisions regarding your personal care in the event you
are unable to communicate those decisions yourself, you should execute
an AHCD. Your Trust generally speaks to financial matters, not to the
topics covered by an AHCD which include:
end-of-life decisions regarding extraordinary measures to keep
you alive; giving your agent power to change the facility where you are
housed (e.g., if the agent determines you are not receiving proper
care); and generally setting out your wishes with regard to your
personal care. Note that the agent you name in you AHCD can be a
different person than the persons you designate as Executor of your Will
or Successor Trustee in your Trust.
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