Probate is a judicial process by which a deceased person’s debts are settled and his or her property is distributed to its new owners. In California, probate tends to be complicated, expensive, and time-consuming. It is also a completely public process, which means that anyone can find out what property you’ve left behind. As a result, many Californians want to avoid probate.
Estate planning is the process of preparing yourself and your property for your eventual death. It can help you avoid probate, minimize estate taxes (if your estate is large enough to be taxed), determine who cares for your minor children after you die, and even provide authority to another person to make medical and financial decisions on your behalf if you become unable to do so before death.
Estate plans in California often incorporate both a Will and a living trust.
If you die without an estate plan, what happens next is completely out of your control. A judge will determine who manages your probate estate. California law will decide who your heirs are and what property each receives. If you leave behind a minor child whose other parent is also dead, a judge will choose who will take care of that child and manage his or her inheritance until adulthood.
A Will is a formal legal document that provides directions for how your property should be managed and distributed after your death. Your Will can also include instructions on other important topics. For example, you can nominate a person to take care of your minor children as guardian if their other parent is also dead.
Wills are not effective until you die and they have been admitted to probate. In California, they are often combined with a living trust, which lets most of your property avoid the time, expense, and publicity of probate.
A trust is a private arrangement under which one person (called the trustee) owns and manages property solely for the benefit of one or more other people (called the beneficiaries). Because trusts are private, they can be established without ever going to court. The trust lasts for a definite period, after which all the property will be distributed to the beneficiaries.
There are many different types of trusts. One of the most popular types of trust in California is the living trust. A living trust can be revoked at any time before the person who created it dies. Typically, the person who creates a living trust also serves as the initial trustee and beneficiary of the trust.
The sooner, the better. Estate planning is not like planning a road trip. Road trips begin when you choose for them to, but we don’t get a choice in when we die. If you wait to begin the estate planning process, you can easily wait too long.
Ultimately, all you need to get started is your own knowledge of your family and what property you own. An estate planning lawyer can help you develop an estate plan built on just those basics. You don’t need to know exactly what you want to happen to your property at the outset, and your lawyer can ask you later for additional information or documents if needed.
Technically, the law does not require you to hire a lawyer to help with estate planning, but it is usually a bad idea to try to do so on your own. This area of the law is highly formalistic, archaic, and complex. It’s easy to get things wrong if you try to go it alone or if you rely on do-it-yourself estate planning websites or books.
Joint tenancies are a type of co-ownership. When one joint tenant dies, the remaining joint tenant(s) automatically take over his or her share in the co-owned property. Some people consider joint tenancies to be a low-cost alternative to traditional estate planning.
But those supposed cost savings are often outweighed by greater expense and complications in the future. For example, inherited property can often be sold without realizing any income for tax purposes, but that is not the case with property received as joint tenant. In addition, property held in joint tenancy may be subject to the creditors of any of the co-owners, and those creditors may be able to force the property to be sold to pay off that co-owner’s debt.
Yes. Although a living trust could theoretically let you avoid probate entirely, in practice most people don’t transfer all their property into the trust ahead of time. As a failsafe for such circumstances, the Will can say that the forgotten property should go to the trust. Only the property that was inadvertently left out of the trust will have to pass through probate.