California Wills and Trusts

Why Use A Will?

The first question is why would an estate planning attorney or a trust attorney use a will at all? You might have heard that everyone should just have a living trust. The truth is that a properly drafted will is a perfectly appropriate tool for estate planning. It has two different functions, depending upon the financial situation of the person involved.

Real property ownership drives the need for a living or revocable trust. If an individual does not own any real property, like a house, vacant lot, cabin, or timeshare, then that person does not necessarily need a living trust. Why? As long as the individual does not own real property, he or she can transfer assets after death by using devices such as a beneficiary designation or a payable on death clause. A properly completed beneficiary designation or payable on death clause is a perfectly valid way to transfer assets upon death; no living trust is needed for such a transfer. Thus, a trust attorney or an estate planning attorney can with confidence draft a will, even a “simple” will for a client and know that that person can avoid the probate system provided that he or she does not own real property and understands how to correctly use a beneficiary designation or payable on death clause for the other assets.

An estate planning attorney can also use a will in conjunction with a living trust, which is also known as a revocable trust. This is a special will, usually called a pour over will, which works with the trust to ensure that assets that did not get properly retitled into the trust will be distributed in accordance with the trust plan.
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Trusts

A properly drafted estate planning package avoids the long and expensive legal process known as probate. The key document in that estate planning package is the living or revocable trust.

Although trusts were originally designed for the very rich, today they are commonly used in wills and estate planning whenever a person or a family owns real property. It is not wise to add a trusted son or a daughter to a real property deed to avoid probate for several reasons. The son or daughter may go through a divorce or bankruptcy that would place the house in jeopardy. Likewise, there are special rules that allow avoidance of capital gains taxes that become less useful if you added someone to a deed during a person’s lifetime.

A trust allows an individual or family to appoint someone else, usually a trusted son or daughter, to transfer property after they pass away without the need for a court order and the long and expensive process that is involved in obtaining a court order.
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Funding the Trust

One of the problems that can arise with a trust is the funding or retitling the assets into the trust. Although the process does not sound like “rocket science,” it is neither intuitive nor common sense. The retitling process is driven by the historical development of trusts as well as the demands of various financial institutions including banks and title companies, which makes it much more difficult than one would expect.

Most financial institutions will require that their forms be used to retitle an asset into the name of the trust, regardless of what the will, trust, or any other attorney-drafted document says. Likewise, real property poses special problems. Typically not only must the real property be scheduled as part of the trust, but it also requires a special deed on the parcel of real property to get it into the trust.
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Getting Help

Make sure that your family is taken care of and that they won’t be subjected to months or years of probate and court orders to receive the assets you intended for them. Your estate planning documents are key in ensuring this. While wills and trusts can be a difficult topic, we work hard to make our clients feel at ease during these discussions and will ensure that your intentions reflected in your estate planning documents and that your family is taken care of as intended.

The Law Offices of David Baker have 30 years of experience working in estate planning and preparing wills and trusts. We work in the following California Bay Area locations: San Francisco, Berkeley, Albany, Pinole, Crockett, Martinez, El Sobrante, El Cerrito, Vallejo and Richmond. Call us or contact us today to discuss your situation (510) 724-2020.
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