What is the difference between a will and a living trust? Why do I need one? Which one should I choose? These questions, and others like these, come across my desk almost daily. It can be a tricky choice, but let’s start out with the basics. This week’s discussion: wills.
Both wills and trusts are documents that transfer property when you die. But in a will – a traditional document that’s been used for many centuries – you identify the property in some way, and name beneficiaries who receive the property. Almost all wills have to go through probate – a court-approval process that is often time-consuming and expensive, and in almost all cases, provides no benefit.
Why should I make a California will?
Should you die without a will, state intestacy laws will dictate how your property will be distributed. California’s intestacy law gives your property to your closest relatives, beginning with one’s spouse or children, working down a list of increasingly distant relatives (siblings, grandparents, aunts and uncles, cousins, in-laws). If the court exhausts this list to find that you have no living relatives by blood or marriage, the state will take your property.
A will can be used to: leave your property to people (or organizations); name a trusted person to manage property left to minor children, and a personal guardian to care for them; and to designate an executor – the person entrusted with carrying out the terms of your will.
Conversely, if, for some reason, a person does not want to give any money to their children or spouse, does one have to specifically disinherit that person? That’s considered the Joan Crawford approach, and it can bite you if you’re not careful.
It’s not totally uncommon for children to be disinherited from a will. But heed this warning: there lies a distinction between disinheriting and forgetting to mention. If the will’s language doesn’t explicitly exclude a child from inheritance, s/he may fall under a protective loophole entitling them to a portion of the estate.
Who needs which?
Typically, basic wills are wise choices for those who’ve not yet accumulated a significant amount of property. If you are under age 50 and don’t expect to leave assets valuable enough to be subject to estate taxes, a basic will is likely to suffice. But as you grow older and acquire more property, you may want to engage in more sophisticated planning.
Will a basic will avoid probate?
No. If you leave anything more than a small amount of property through a will, probate court proceedings will probably be necessary after your death. Although it varies from state to state, probate can take six months or a year and eat up three to five percent of your estate in lawyers’ and court fees. And your beneficiaries will probably get little or nothing until probate is complete.
Take a common situation where a husband and wife want to leave their property to each other or, if they die together, to their children in equal shares. They also want to name a personal guardian for their children. They can safely make basic wills themselves without hiring a costly expert. Here a few other examples of situations where a basic will is all that’s needed.
- Cindy and Sam, are in their late 30s, own a home, two cars, and some savings. Their net worth totals $400,000. They have one child, Kim, age 9. Each prepares a will leaving all his or her property to the other. If they die at the same time, Kim is to receive all their property. Cindy and Sam agree that Cindy’s brother will care for Kim and manage the property until Kim turns 18.
- John, a widower with three grown children, owns property with a net worth of $510,000. He creates a will leaving all his property equally to the children. He specifies that if any child dies before him, that child’s share is to be divided equally between the surviving children.
- Carol is a single mother with two teenage children. Though she’s not on great terms with her ex-husband, he’s a decent father and pays child support more or less on time. Carol’s will leaves all her property equally to her children. Because she does not want her ex-husband managing money left to her children if she dies, she uses her will to appoint her sister Debbie to manage each child’s property until that child turns 18.
Through these examples you can see how wills can benefit people in various situations.
Next week we’ll delve into living trusts, and show some differences between the two.
This article is for information only and not to be taken as legal advice or counsel.
Karen Corbelli is a Redding-based legal document assistant armed with more than 20 years of legal experience. She can be reached at 515-5081 or kjparalegalservice@yahoo.com.
