Legacy of Love TM
What is Estate Planning?
A lot of times when people hear the word “estate,” they envision sprawling English manors with gated entries. An “estate,” though, is a legal term that just means all the stuff you have acquired over your lifetime. Those of us who do not own sprawling English manors need to make a plan for all of this stuff just as much, if not more, than those with the maids’ quarters. For the majority of us, our estates, though hard-earned, are not always all that sprawling. For those with a little less there is less room for mistake, which means that estate planning is all the more necessary.
How do I create an Estate Plan?
Believe it or not, the State of California already has a plan for you. This plan is called Probate. Probate is a court process that returns property back to the land of the living. However, most don’t like the plan that the state has to offer because the process is difficult and time consuming (Learn more about the Probate Process)
Since most do not like the plan that the State of California has laid out for them, they opt instead to write their own plan. Many think that a will accomplishes this task, but a Last Will and Testament is merely a letter to the Probate Judge that tells the court how the planner wants their property distributed when they pass.
You can create your own plan by creating a Trust, a special kind of trust called a Revocable Trust, sometimes called a Living Trust, and sometimes even called a Revocable Living Trust. While there are various types of trusts that are used to plan for taxes, the Revocable Trust is used to plan for taxes and to plan for all of the unthinkable events that are bound to happen at some point. One of the great benefits of creating a Trust is that you are no longer bound to the rules that the State of California has created for you. Creating your own plan becomes more important as life becomes more complex: as families become more complex, society becomes more litigious, employment becomes more irregular, etc.
What is a Trust?
A Trust, a Revocable Trust like we are discussing, is a bucket. This Trust Bucket can hold your property and you control the property in this trust bucket by holding the bucket handle (as Trustee, the legal name for the Boss). Further, you can control this bucket even when you are no longer able to make your own decisions because you can appoint others (Successor Trustees) to take over when you can no longer attend to your own finances. You can also leave instructions for the person appointed to be your Successor Trustee and they have a duty to follow those instructions. The problem with owning property in your name only is that the property held in your name only may have to pass through Probate. If you read up on that process you would know that probate is a PAIN so anything you can do to avoid that process would be good. A trust has many other benefits too.
What are the benefits of a Revocable Trust?
Some of the benefits of setting up a Revocable Trust include:
- probate avoidance
- asset protection
- remarriage protection
- lifetime planning
- tax planning
- special needs planning
- protecting minor children
- protecting adult dependents
- protection from beneficiaries’ drug habits, gambling addiction, and spendthrift habits
- planning for your pets
- planning for your business
- planning for peace for a blended family
- really, the list goes on and on