California Wills & Living Trusts

What Is a Will?

A will is the traditional document that directs how and to whom an individual's estate is to be distributed. It has been in existence for thousands of years. Wills are still used; in this office we draft wills for people with a small estate (less than $100,000 in California) and as a backup in conjunction with a trust. The backup will in a trust package is called a 'pour over' will because it directs that all assets are distributed to the trust.

If you do not have a will or a living trust, then your estate will be distributed pursuant to the statutory schedule of distribution.

Trusts

Trusts were originally used only by the very rich. However, over the past 20 years, trusts have been developed for individuals of modest means to avoid the costs and delays of probate. This is particularly important in California because of the large appreciation of real property. Individuals from out of state will hardly believe it, but the average price of a home in the San Francisco Bay Area is more than $500,000.

The reason that the cost of a home is important is because attorneys in probate are paid a percentage of the value of the estate. As real property continues to escalate, so do the fees. Given the cost of real estate in California, a modest estate can generate attorney's fees and costs easily in excess of $15,000.

Funding the Trust

Although trusts are saving people hundreds of thousands of dollars each year, they have problems. The trust should be funded. By funding, I mean that an asset should be placed in the name of the trust. Most but not all assets should be placed in the name of the trust. One of the problems using prepackaged will and trust software is that there is little assistance funding the trust. If an asset is not properly placed in the trust, then your heirs may require the assistance of an attorney to place the asset into the trust; if that does not work, then the only recourse is probate. Finally, certain assets should not be placed in the trust for tax reasons.