This writing is the second in a series regarding estate planning. The first writing covered the goals of estate planning and how things can go wrong for someone who has not done it. This writing will start discussing some of the estate plan documents.
Broadly speaking, there are two goals of estate planning.
- The first goal is to distribute assets at a person’s death the way he wants and efficiently. Again, distributing (or transferring) assets at death efficiently means with a minimal amount of effort, delay, taxes, fees, and other expenses.
- And the second goal is to make sure that someone a person knows and trusts will have the legal authority to take care of her if she cannot take care of herself anymore in the future for some reason.
This post is focused on that first goal of distributing assets at a person’s death through a document called a will.
There are 2 primary estate planning documents that will transfer a person’s assets at death: a will and a trust. A will is a good place to start because most people are comfortable with what it is and what it does.
A will is a document that provides for transfer (or distribution) of a person’s assets at death. Normally a will also includes a nomination of the person to be in charge of carrying out this transfer, and that person is known as an executor. By the way, the person who signs a will is called a testator.
So a will satisfies the goal of making sure that a person’s assets go to the people he wants to receive them when he dies (and not based on the provisions of California law).
A will does not normally accomplish the goal of distributing a person’s assets efficiently because it does not avoid a probate decedent’s estate court proceeding.
Also a will does not do anything until a person’s death. It has no effect until that time. So it does not help with the second goal of estate planning, which is to make sure that someone a person knows and trusts will have the legal authority to take care of her if she cannot take care of herself anymore in the future for some reason.
As the next writing about trusts will discuss, having a trust does not mean that a person should not also have a will. When a person has a trust the will normally should be a “pour-over” will that provides that all of his assets transfer to the trust after his death. In other words, like a water pitcher pours water into a drinking glass, a pour-over will pours a person’s assets into his trust after his death. The pour-over will is a back-up device, and it is best not to need to use it because using it may result in a probate decedent’s estate court proceeding that most people are trying to avoid.
There are a few ways of addressing the limitations of a will. One of those ways is with a trust.