A will is a legal document in which the person creating the will, known as the testator, sets forth persons or an entity to inherit their estate at the time they pass. An estate includes all assets owned by the testator at the time of death, such as real estate, bank accounts, securities, personal property, and any other assets one may own, regardless of the size or value of the same. In California, a will does not need to be notarized. However, it does need to be signed by the testator in the presence of two legal witnesses, unless it is written in the testator’s own handwriting and is a valid holographic will.
When a person passes away without having a valid will in place, a person is said to die intestate. The property of a person who dies without a valid will is distributed according to state laws where the person last resided, via a process known as intestate succession. Each state has its own set of laws which govern how property is distributed. In the event the person owned real property outside of the state where they resided, the laws of the state where the property is located will govern.
Similar to a will, a trust is likewise used to designate persons or entities who will inherit one’s estate at the time one passes. However, a trust is a legal entity which allows one to transfer their assets into the trust. The creators of the trust, known as the trustors, can choose to retain full control over all of their assets placed within the trust. The goal of transferring ownership of assets into a trust is generally to avoid a lengthy and costly court process known as probate, as well as to avoid incurring unnecessary taxes and legal fees during the final transfer of one’s assets. In addition, by placing one’s assets into a trust, a trustor can set forth specific terms for the management and distribution of their assets after the trustor has already passed. Various trust entities can be prepared in California depending upon one’s circumstances, the most common of which today is known as a revocable living trust.
Clients often question whether it is necessary for them to establish a trust and go through the process of transferring their assets into the trust, particularly if they already have a will in place. While a will provides a Court with direction as to how to distribute your estate, it does not exempt one’s estate from probate. In California, certain estates considered to be small estates may qualify for exemption from probate. However, the vast majority of people owning real estate in California do not qualify for this exemption, and as such trusts are often used to prevent an estate from going through probate. Whether it is advisable for one to establish a trust depends on many factors, including an evaluation of the value of a client’s assets, the manner of title in which real estate and other assets are held, and, importantly, the goals and wishes of the client.
To determine whether you are in need a will or trust, we invite you to contact the Law Office of Christine Padilla at 858.342.4296 to schedule a complimentary consult and discuss your estate planning needs.