The Elder and Disability Law Firm, APC
How California residents can protect their assets after death
According to WealthCounsel's estate planning awareness survey, 40 percent of Americans have set up a will but only 17 percent have a trust in place. The low numbers have some experts worried that many are not adequately protecting their assets for the benefit of their heirs. Whether they have a home, savings account or 401(k) plan, their assets will one day be distributed, so it's important to have an estate plan to protect their best interests.
Simply handing down assets is not a good idea as not everyone is skillful in financial matters; some may even become irresponsible with the money left to them. This is where creating a trust comes in. Trusts are usually set up for a specific reason, such as to pay for someone's education. The trustor can also specify when assets will be passed down to beneficiaries.
Another benefit is that trusts are not subject to probate. Probate courts determine the validity of wills and then carry out the distribution. On the other hand, trusts go to a designated trustee, who handles the distribution of assets to the beneficiary. Trusts are also exempt from creditors as well as the marital pool. Therefore, if a beneficiary divorces, none of the assets goes to the ex-spouse.
A lawyer could explain more about trusts and trust administration. Trusts cannot completely avoid estate tax, but a lawyer could help find every possible exemption for his or her clients. A lawyer may also recommend that the client create a will and update beneficiary designations in response to any major life changes.