1. Surprisingly to me, about 35% of folks die without leaving a will or trust to pass on their property. This is called dying “intestate.” The result is that your property passes to your heirs in a “pecking order” pre-established by the California Probate Code–possibly not in the manner you would have chosen had you made a will or a trust. Another negative consequence of dying intestate is that your estate will have to undergo a costly and time-consuming probate before title to the property can be transferred to your heirs.
2. So, to pass on your property should you use a will or a trust? As a starting point, if you own a home, you should make a trust. This is because when you die, no probate of the trust would be required, whereas a probate would be required if this house passed, instead, by a will. When you do set up a trust, be sure to transfer title to the house by deed to yourself as trustee of your new trust.
3. Just what is a “trust?” A trust is an arrangement whereby you as “trustor” transfer certain property to a “trustee” (typically yourself while you are alive) who holds and manages this property for the benefit of a “beneficiary” (again, typically yourself while you are alive, and whoever you leave the property to, upon your death). The terms of this trust are set forth in a trust instrument (usually called a Declaration of Trust or a Trust Agreement).
4. In the above case, what type of trust should you use? Typically, you will use what is called a revocable living trust. Such a trust is “revocable,” since it can be changed in any manner or even terminated while you are still alive. It is “living,” because it is created while you are alive.
5. If you create a revocable living trust, are there other estate planning documents you should create? If so, what are they? Yes, there are some supplemental estate planning documents you should have. Here are the most important ones:
Will – This will provide that anything that was not transferred into your trust, or disposed of by other means (such as a life insurance policy death benefit payable to its beneficiary) will pass to your trust and be distributed as a part hereof.
General Power of Attorney – this is a general/financial power of attorney–designating an “agent” to conduct your affairs if you are unable.
Advanced Health Care Directive – contains: a health care power of attorney – designating an agent to make emergency medical and related decisions on your behalf if you are unable; “pull the plug” provisions if you so desire; and organ donation directions as you see fit.
6. If you’re married, what estate planning documents do you need? Typically a married couple will have one “joint” trust instrument between yourselves, and a separate will, general power of attorney, and advance health care directive for each of you.
Always ready to be of service, I am Dick McEntyre, having served the San Diego community for over 40 years. If you have a tough time getting around, I will gladly make a “house call.”
Dick McEntyre is a lawyer doing estate planning, estate administration, and real estate legal work. His office is located at 3156 Sports Arena Boulevard, Suite 102, San Diego, CA 92110 For more information call (619) 221-0279 or visit www.richardfmcentyre.com