When you’ve worked hard your entire life to save money or acquire valuable items, you’ll likely want to eventually pass the items in your estate to your relatives. However, the process of passing down your assets could go wrong if you don’t know the proper steps to take. If you’re a California resident, here are some essential things to know about estate planning, including living trusts and simple wills.
Should you have a will?
If you want to remember the distinction between a living trust and a will, keep this in mind: A living trust is valid while you’re living, and a will only goes into effect when you pass away. While a will is a popular choice for estate planning, the reality is that this document is not the ideal option for most individuals.
When you have a will, your loved ones will have to go through the probate process after you die. There are court costs involved, which can be expensive. With a living trust, the costs are higher up front, but you don’t have to go through probate. Some states provide expedited probate if your estate is worth lower than a certain dollar amount.
Why you should consider a living trust
A living trust could be an essential tool for estate planning because it becomes valid as soon as you sign the required documents and your assets are transferred into the trust. You’ll now be expected to manage your assets. You can look at the trust as a type of affordable active management if you’re an investor. Placing your property into a trust allows you to control what will happen to your assets for the rest of your life and after your death.
It is also important to note that trusts are not on public record, unlike a will. You’ll likely experience state and federal tax breaks, and you’ll have more control over when a child, grandchild or loved one will special needs will gain access to the trust.
