18 Apr Why Don’t More Families Have Living Trusts? Read These 4 Excuses!
Why don’t more East Bay families have Living Trusts? Good question. But here are some of the excuses:
1. I don’t have an estate–why do I need an estate plan?
This is, of course, the classic excuse. Certainly those with a lot of assets have more to protect and more to lose by not making plans for the distribution of their estates. Yet many people are surprised at the cumulative value of their assets. Here in the Bay Area, with our inflated real estate market, anyone who owns a home has a significant investment. Cars, antiques, artwork, jewelry, brokerage accounts and life insurance policies—collectively, all of these can contribute to a significant total net worth.
2. Won’t my spouse automatically inherit my estate?
Some families assume that if something happens to one spouse, everything will, by default, go to the surviving spouse. In general, this may be true, but what if something happens to both spouses? A tragedy, but it happens. And sooner or later, that remaining spouse will die. So far, no one has figured out a way to beat the odds. Without a Will or Trust, along with their grief, their heirs will be dealing with Probate. Depending on the complexity of the estate, Probate can take several years, and it is entirely preventable by creating a Living Trust.
Or here’s another scenario that will affect spousal inheritance
Let’s say someone refinanced his/her mortgage, and one spouse’s name was taken off the house? Then imagine that spouse dies. That estate will not “automatically” pass to the surviving spouse. In fact, it will potentially make the surviving spouse’s life very difficult indeed.
3. I don’t want to inherit my parents’ credit-card debt
This was a new excuse we heard a few weeks ago. One son had discouraged his parents from creating estate-planning documents because he didn’t want to be responsible for his parents’ credit card debt when they died. In general, children aren’t responsible for a deceased parent’s debts, and in some cases, a spouse may be exempt as well. In general, the estate is responsible for paying debts. Once assets are liquidized and if there isn’t enough money in the estate to cover the amount owed, the debts generally go unpaid. It’s those who are owed money—not the heirs–who are left holding the bag.
4. I have a Will, so my estate won’t be subject to Probate
In fact, all Wills are subject to Probate. It’s the process in which a court determines whether the document is valid and ensures that relatives and creditors are notified. This process can take several months and drain thousands of dollars from the value of the estate. A Living Trust is the legal document that holds your property; when you die or become incapacitated, the property in your Living Trust is smoothly transferred to your beneficiaries.
Something else to think about:
- If you own property in more than one state—even if it’s a timeshare–you DO want a Living Trust. Going through Probate in multiple states is an experience that you will never forget.
- If you value privacy, you want a Living Trust. A Will is a public document, and anyone can come to a Probate
- Keep your Trust updated with life events.What’s a life event? Think about anything that will affect the inheritance of your heirs—births, deaths, divorce, important investments.
We encourage everyone to create a Living Trust
Creating a Living Trust is one of the most thoughtful things you can do for your family. If you need to create or update your Trust, contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. Our dedicated team is helpful, compassionate and affordable.