I got a message this week from someone who told me that their financial advisor told them that a trust wasn’t worth it and that a will was enough. I was shocked. This might be true in other states, but for most people in California, they need a comprehensive estate plan, which includes a trust.

Here are some questions to ask yourself to see if a comprehensive estate plan is right for you:

1. Do you have more than $184,500 in assets?

2. Do you own a house in California?

3. Do you have minor children?

4. Do you care who takes care of your minor children if you’re incapacitated or if you die?

5. Do you have a spouse AND children?

6. Do you care who makes medical decisions for you if you’re incapacitated and can’t do it for yourself?

7. Do you care who makes financial decisions for you if you’re incapacitated and can’t do it for yourself?

If you answered YES to any of those questions, you need a comprehensive estate plan. Here’s why:

Probate: If you have more than $184,500 in assets (which yes, you likely do if you own a house in California), then your entire estate is going to go to probate court if you only have a will OR if you do NOT have a will. In both of those circumstances, the probate court gets called in. Why does that matter?

• It takes 18-24 months before anyone gets anything.

• It’s public.

• Costs are based on a percentage of gross assets. Here’s a breakdown of all the costs involved in probate. Spoiler: It’s way more than you think, and it’s set by the state. (E.g. $500,000 in gross assets is about $30,000 in potential fees.)

This sounds awful, right? How to get out of probate: a living trust. A trust is how you name your assets while you’re alive and how you gift them when you die. It does the things you think of in a will, but without a court, without publicity, and without the state-required costs. A living trust is for ANYONE, not just super wealthy, high net worth individuals.

Minor Children: If you have minor children, you know they aren’t capable of managing money quite yet. If you only have a will, then they will be given whatever assets and held in an account until they’re 18 OR your guardian will need to file a petition with the court to get access to that money.

If you have minor children, a court will need to appoint a guardian to take care of them on a day to day basis. If you don’t have a will, who will the court choose? Who knows?! You didn’t decide that in your comprehensive estate plan, so the court doesn’t know what you’d prefer.

BUT if you have a comprehensive estate plan in place, then you have a trust and a will. If you have a trust in place, you can dictate WHEN they get which assets. Your financial agents (successor trustee) manages the money until they hit the age you decided was okay with you. And you can name your child’s guardians in the will. Peace of mind.

Incapacity: If you care who is going to make decisions for you if you’re incapacitated, then you need an estate plan. Otherwise, anyone can go to the probate court to get the right to make decisions on your behalf. Related: your loved one MUST go to the court to get the right to make decisions on your behalf if you don’t already have a financial power of attorney and healthcare power of attorney.

Intestacy: If you don’t have an estate plan, the state gets to decide who gets what of your assets. You assume it all goes to your surviving spouse, but that’s not necessarily true. If you have children, usually assets are split between the spouse and the children — which surprises most people.

So how do we deal with this: a comprehensive estate plan!

• A trust: to make sure you avoid probate and your assets can be managed if you’re incapacitated and get where you want them to go when you die.

• A will: to make sure everything gets into the trust and to name guardians for your minor children

• A financial power of attorney: to make sure that the person YOU WANT makes decisions for you if you’re incapacitated

• A healthcare power of attorney: to make sure that the person YOU WANT makes healthcare decisions that you agree with if you’re incapacitated.

Contact me for a complimentary consultation and we can go into more details, and talk about taxes!