Although it is evident that many families need to start thinking about estate planning for their family, the fact is it isn’t a priority. According to Daily Finance, more than half of Americans don’t even have a will. Some families are either too busy trying to catch up on bills or just simply do not see the need for this part of retirement planning.
Probate is one of the first steps in the legal process of managing the assets of a person once he or she passes away. To prevent the confusion of how people’s assets will be managed and distributed either while they are alive or when they pass away, it is important to understand the basic process of probate as well as the two types of documents that ultimately determine how much of the assets are kept by the beneficiaries. These two documents are a will and a living trust.
There are two types of wills:
1. Last will: This is used to distribute property to beneficiaries, specify any last wishes, and name any guardians for minor children if there are any. It is a critical part of any estate plan. Without a last will, the courts will end up making these decisions for you.
2. Living will: This permits you to specify any healthcare decisions in advance, such as whether or not you wish to be put on or remain on artificial life support. You can also appoint someone to make health decisions for you if you are unable to do so yourself.
What is a living trust?
A living trust is used to transfer property to your beneficiaries. But unlike a last will, the difference is that a living trust is not usually subject to the probate process. The probate process can take years and cost thousands in court and attorney fees, so a living trust is an important option to consider.
Quick recap: There is a process called probate that determines where you’ll assets will go when you pass away. In California, every estate over $100,000 will go through this process in a probate court. You should implement a will or a living trust for your family that suits your needs; be sure to get the advice and recommendations of a professional estate planner. Both documents are treated differently by a probate court and may possibly allow you to avoid the process altogether if set up correctly. These documents can give you peace of mind because you know that when you’re gone, your assets are left with the people, charities, and family members of your choice.
Whatever financial situation you are currently in, if you have overlooked this part of your retirement planning, you might remind yourself that your loved ones will appreciate the fact that you got educated about this process and prepared for it ahead of time. I’ve personally got a living trust set up to ensure my chew bones and stuffed toys go to the furry friends I love most.