According to a wills and trusts survey conducted each year by Caring.com, the percentage of Americans with wills has actually fallen over the past four years, from 42 percent to 32.9 percent. This means that only about one in every three Americans has begun the estate planning process.
One positive result seen in the Caring.com survey is that the pandemic increased awareness among young adults of the need for estate planning. Almost shockingly, 18- to 34-year-olds are now 16 percent more likely to have a will than those who are 35 to 54.
Wills are the basic building block of estate planning, but they have their limitations and must go through a court process known as probate before the assets of the deceased can be distributed. Trusts, on the other hand, avoid probate and can be less cumbersome to administer.
Whether you have a will or have been putting off creating one, you need to explore all the estate planning tools available and come up with the right instruments to plan for your future and care for your loved ones when you’re gone. If you’re in Woodland Hills, California, or anywhere in the San Fernando Valley, contact The Law Offices of Kenneth W. Drake, Inc. I will discuss your situation with you, explain your options, and help you achieve peace of mind when it comes to planning for the future. I will also vigorously represent you should litigation arise regarding your estate plan. My firm proudly serves clients through the counties of Los Angeles, Ventura, and Santa Barbara.
In a will, you designate how your assets should be divided and to whom after you’re gone. You also name a personal representative to carry out your wishes. Your personal representative will present your will to a probate court that will then oversee the disposition of the will.
Your personal representative will become the executor of your will with the proceedings overseen by the court. While the executor has broad personal responsibilities, he or she still must get everything approved by the court. The process can take up to a year or more.
In a trust, you name a trustee, who is similar to a personal representative. Your title goes by various names, mainly trustor, but also settlor or grantor. In a trust, you also designate the distribution of your assets, and the trustee ensures your wishes are carried out. The big difference – and advantage – over using a will is that there is no need for probate court. The administration of the trust can thus take far less time.
Another advantage of a trust is that you control all your assets while you’re still alive and are physically and mentally capable of doing so. If you become incapacitated, though, your named trustee – often called a successor trustee – will administer your assets for you.
The trust described above is known as a living trust, or revocable trust. You retain complete control of your assets while you’re capable of doing so. The trust can also be modified or revoked at any time. When the successor trustee takes over after you’re gone, all proceedings remain private. If a will goes through probate, it becomes a public record. Trusts often make it harder for creditors to claim assets.
Another type of trust is called irrevocable, which means you cannot change or modify it. Irrevocable trusts are often used to shield assets from claims of creditors, beneficiaries, and even Medicaid. They can also be used as hedges against estate and gift taxes.
There is almost a trust for every circumstance and need. Spousal trusts can pass assets from one spouse to the other spouse to avoid tax consequences. Charitable trusts can be established to designate assets for a particular charity or set of charities. A special needs trust can help a family member who is dependent on government aid for their health and well-being. It provides additional funds that won’t trigger a denial of government benefits.
Spendthrift trusts can be used on children whom you don’t trust with a sudden infusion of money. The spendthrift trust distributes funds only as the children need them for genuine purposes. A generation-skipping trust allows you to leave your assets to your grandchildren rather than your children.
You can never be sure of your future. You need to take concrete steps to plan for your loved ones’ welfare, and for your own as well. If you’re in or around Woodland Hills, or even as far away as Santa Barbara, contact me at The Law Offices of Kenneth W. Drake, Inc. I will listen to the circumstances of your life, assess your goals going forward, and advise you on how best to proceed with safeguarding the future of your loved ones.