1. To Avoid Court
Did you know in California if you own assets over $150,000 in your individual name, your estate is likely to be probated? This means that after you die, your beneficiaries will have to go to court in order to get your assets. A trip to the courthouse isn’t exactly the most generous of parting gifts. To make matters worse, the probate process can take over a year. That means your loved ones will be left settling your affairs long after you have passed. Probate is also public so plan on everyone knowing exactly what you have and who its going to. How can this be avoided? With a living trust. Having a will is just not enough to avoid probate. A will can help decide who gets your assets but it wont achieve the goal of avoiding probate, for that you will need a living trust.
2. To Decide Who Gets Your Assets
If you don’t have a will or trust in place, you don’t get to decide who gets your assets. The California laws of intestate will decide for you. Sometimes, this can be okay but for many of us with complicated family situations or a desire to provide for more distant relatives or friends, leaving this decision up to the state just doesn’t’ make sense. With a trust, you can easily divide your estate in any manner that you want. You can provide specific gifts to certain individuals, give money to charity, or give your children cash distributions at set ages.
3. To Choose Who Will Take Care of Your Kids
Part of your overall estate plan includes a will as well as a trust. The will allows you to appoint a guardian for your children. The choice of who will take care of your kids when you die is often something that keeps parents up at night along with the crying baby! While it can be a hard thing to think about and plan for, the alternative of leaving these decisions to the courts is unthinkable. There are so many factors that go into this important decision. There is really no decision that is more important than deciding who will raise your kids if you can’t. Putting your guardian nominations into your will ensures that your kids are taken care of by someone that you love and trust.
4. To Save Money
The probate process is very expensive. Personal Representatives and Attorneys that assist in probating an estate are entitled to fees that are set by statute. For an estate worth 1 million dollars, the executor and attorney are each entitled to $23,000. For an estate worth $500,000 they are each entitled to $13,000. Your hard-earned money is better left to your loved ones than to paying fees that could have been avoided if you had a trust in place.
5. To Make Important Healthcare Decisions
Your estate plan also includes a health care directive which appoints an agent to make health care decisions on your behalf and allows you to make some of those important healthcare decisions in advance. Having a healthcare directive in place ensures that your healthcare decisions are made in advance by you so that these important decisions are not left up to chance.