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Del Mar, CA 92014

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Trusts and Wills

What is a Trust and Why do I Need One?

If your assets are worth more than $150,000, a living trust is an estate-planning device that has many advantages that a will, by itself, does not have.  A trust can provide you with substantial benefits that cannot be achieved any other way. Some of the most important ones are listed below:

  1. With a trust or will, you can make sure that the people most important to you inherit in the way you direct. This may include your stepchildren, grandchildren or parents. Without proper planning, these loved ones could be excluded.  With planning, you determine who will inherit your assets instead of the State of California deciding for you.
  2. If you have minor child or children who do not have the maturity to inherit a large sum of money, a trust allows you to distribute your assets to them over time. You could have the money doled out over a period of years or not paid until the child graduated from college or reached age 30. You could require that the inheritance be used exclusively for educational purposes. You can make sure that your values live on in the inheritances that your children receive.
  3. A Living Trust can provide you with flexibility. For instance you can protect a special needs child from being disqualified from state or federal benefits. You can distribute cash to one child outright while another child has her interest held in trust until a certain age, or you can give designated funds to your church or a favorite charity. You can also provide a means to protect your pets after you pass. Estate planning documents are required to effect any of these wishes.
  4. A trust avoids probate. Probate is a long and expensive legal proceeding. If your property is in a trust, the assets of the trust are distributed according to its terms, without any court involvement. Probates take at least a year to complete, and can span several years.  The costs are high, and they are calculated as a percentage of the gross estate. California probate fees are some of the highest in the country.
  5. A trust is private. If your estate is probated, everything about your estate is public.  Any member of the public can view and copy everything in the court file, including your will.  Privacy from neighbors, creditors, in-laws, or former business colleagues is a concern for almost everyone.
  6. A trust is invaluable if you happen to own any real property in another state. Without a trust, you will have to open TWO probates and pay two sets of fees.  With a trust, all probates are avoided.
  7. A trust provides for the management of your assets in the event of your disability or incapacity. More often than we like to admit, a family members suffers an unexpected illness or accident that makes it impossible to manage one’s own affairs.  With a trust, you select someone to manage your assets in the event something happens to you. It can all be handled inside the family. If you have an older parent, it may be particularly important for that parent to set up a trust with you as the trustee.  This can save the whole family from terrible heartache and huge expense.
  8. A living trust, like a will, can be amended or revoked at any time before your death. If circumstances change or your family situation changes, you can change the terms of the living trust or revoke it entirely. The living trust is a dynamic document that should reflect what you want to happen to the assets you have worked to accumulate during your lifetime.

Given all these considerations, you might ask, “Who doesn’t need a living trust?” Essentially, if none of the eight points mentioned above are important to you, or you do not own real property and your assets are valued well below $150,000, you do not need a trust.  However, you still need a will!

Frequently, people assume that if you have had one marriage, all children are from that marriage and you want your spouse and then your children to inherit, you don’t need a trust or a will. But they must also assume that the surviving spouse will not remarry after your death, that there are no minor children at the time of your death, that all of the children’s educational needs have been met, and that no one in the family struggles with financial management issues, creditor problems, drugs, alcohol, or life planning challenges, and that you don’t mind paying thousands of dollars in probate fees and/or federal estate taxes (which could have been avoided).  It is simply impossible to be certain about ALL of these issues.  A living trust or will addresses them, saves time, saves money, and ensures that what you want to happen does happen.

For most estates, the cost to set up a Living Trust is between $2,000 and $4,000.  The cost to have a will prepared is between $500-$1,000, depending upon its complexity.

A lot of people just don’t get around to making a trust or a will. It costs money and it requires you to think about what would happen if you or your spouse dies.  Most of us don’t like to think about these things. However, as you can see, it could be very important to you and your loved ones that you DO think about it.  If you are not sure what kind of plan you would like to establish, just ask us and we’ll tell you. If you’re one of the few who don’t need any estate planning documents, we’ll tell you that too.

Don’t hesitate to call us 760-613-4740 or email us with any questions.