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I am getting an ever-increasing number of clients calling me with questions about a will or trust. It seems that a number of attorneys in California are creating these questions by setting up “Free seminars” for prospective clients to attend. Then after 2 hours of confusion and fear mongering, the seminar apparently spurs the potential client to act. Unfortunately
the documents they create, the schemes they offer and additional provisions included in the trusts are complex and expensive, doing little to actually solve the client’s tax and estate planning needs. They are delivering a large trust with pages and pages of documents that are not filled out, leaving the client to write in the information. Worse, assets are not being transferred into the trusts, thus making the document a $7,000 will. Here is a simple explanation for our clients to consider and I hope it benefits the reader as well.

A will is nothing more than a writing that tells the Court in California what you want to do with your “stuff”. If you have no “stuff” then you can even get by without a will or trust or any other document. After all without “stuff”, why give the Court any directions because there will be nothing to do.

A Will gives what you want to certain people or groups of people. If you have “stuff” and you want to dictate who gets that stuff you should have a will prepared. Then when the need arises to puzzle out who gets what, your directions can be followed. If you have some but not a lot of “stuff”, then you may not even need to go to court, your executor will hand out your “stuff” where you direct it and be done. Creating or buying a trust is a waste of your hard earned money.

If you own a house in California, you unfortunately have more than a little “Stuff”. A house needs to be transferred either by joint tenancy, a will with probate or a trust. Joint tenancy is risky for a number of reasons that will not be elaborated here, and probate of the house title change from your name to your heirs is costly. Therefore a simple trust may be in order. Unlike many years ago, a living trust can be created that simply holds title to a house or other property and when you pass, the trust either continues to hold the property or it is distributed as you direct. You therefore completely avoid Probate delay and hassles, and your appointed trustee carries out your desires.

Lastly if you have a lot of “stuff”, your estate may need to pay estate taxes. While there has been a lot of talk of repealing the estate taxes, when did any governmental agency eliminate taxes by your recollection. None in mine. Therefore I would plan and save estate taxes where I could by creating a trust that protects your remaining spouse during his or her lifetime, instead of paying the taxes right away. If this method is incorporated, the beauty is that if the money allocated for taxes is spent before your spouse’s death no estate taxes have to be paid. So why not have that comfort and peace of mind.

There are far more complicated structures and we could write about QTIP elections, Generation skipping and other tax savings. But the above is all most people need. An experienced estate attorney will tell you that this is a simplistic view of the estate planning, and he would be right. But my experience is that most people only need a simple plan and will get all the benefits without all the costs to attorneys. Of course there are the exceptions, and for those few, a more detailed decision model is required.

Keep it as simple as reasonable and you will have the peace of mind when you need it

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