A will is a legal document that is made by an author while he or she is alive that expresses his/her intentions to coordinate the distribution of their assets after death. Unlike a trust, a will only goes into effect upon the testator’s (creator of a will or a trust) death. The document can also appoint guardians for minor children. Having a testamentary instrument is important, as it allows an individual to communicate their last wishes clearly in a legally recognizable way upon death. It is significant to note that unlike a trust instrument, assets that pass through a will typically undergo the probate process. Because wills only go into effect upon death of a testator, they’re generally less flexible in their ability to plan and take into account exigent circumstances in comparison to a trust instrument.
When a person dies without a will or trust, this is known as dying intestate. When one dies intestate, the state you reside in will have a default statutory scheme that will dictate as to how your assets will be distributed to your heirs. As such, your state’s default statutory scheme for an intestate distribution may not produce the results that you would prefer for your survivors and heirs. You can prevent this from happening by preparing an estate plan by preparing either a will or a trust. However, as stated above, a will is generally less flexible in its planning capabilities when compared to a trust instrument.
A will generally contains the following aspects:
Certain assets can pass outside of probate regardless whether a Will or Trust instrument has been executed. Assets such as pay-on-death accounts, qualified retirement accounts, and brokerage accounts are examples of assets that can pass outside of a will or a trust. Because these assets pass by contractual designations, it is integral to maintain that the beneficiary designations of assets of this nature are up-to-date. If for example, if the intended beneficiary to your assets has predeceased you, and no back-up beneficiary designated, the asset could be subject to probate and follow the rules of intestacy to determine which one of your heirs has priority claim.
Usually Subject to Probate
Not Usually Subject to Probate
Assets passed by Will
Assets held and passed in Trust
Retirement accounts or investment accounts without listed beneficiary designations.
Cash accounts without transfer on death (TOD)/ pay on death instructions (POD)
Investment accounts, retirement accounts with TOD instructions or updated beneficiary designations.
Real estate (depending on if the asset is held with survivorship rights)
Jointly held assets with survivorship rights
Assets held in Joint Tenancy
Assets held as Tenants in Common
The items listed in the left column will typically undergo the probate process, which is the state court’s administration of your assets. For the assets listed in the right column, beneficiaries will likely be able to take legal ownership of the assets without undergoing probate and incurring associated court costs and attorney fees.
In California, probate fees can be significant. Pursuant to current legislation code, probate fees on an estate valued at $1,000,000 can be close to totaling $50,000 in attorney and executor fees. However, it should be noted that there are certain situations when the probate process could be a beneficial course of action. As a matter of course, you should discuss your specific situation with your attorney as every situation is different.
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Disclaimer: While the information on this site is about legal issues, it is not legal advice or legal representation. Because of the rapidly changing nature of the law and our reliance upon outside sources, we make no warranty or guarantee of the accuracy or reliability of information contained herein.