Benefits with County of San Diego

Wills and Trusts

People at all economic levels benefit from an estate plan. Upon death, an estate plan legally protects and distributes property based on your wishes and the needs of your family or survivors with the fewest tax consequences.

As you make plans for the end of life, it is important to share details with family ahead of time. Make sure you know whose names are on accounts with you and their rights to the account after your death. If you are married, make sure your spouse knows how to access all of your accounts. You may also have a durable financial power of attorney to manage your finances if you are unable to do so.

Wills

A will states how you want your property to be distributed after you die. Writing a will can be as simple as typing out how you want your assets to be transferred to loved ones or charitable organizations. If you do not have a will when you die, your estate will be handled in probate, and your property could be distributed differently from what you would like. When writing your will, remember the following:

• In most states, you must be 18 years of age or older.
• You must be of sound judgment and have adequate mental capacity.
• The document must clearly state that it is your will.
• An executor of your will, who ensures your estate is distributed according to your wishes, must be named.
• You must sign your will in the presence of at least two witnesses for it to be valid. Your will doesn't have to be notarized, but doing so can safeguard any claims that it is invalid.
• A financial will and testament will always supersede a last will and testament when bestowing financial assets.

It may help to get legal advice when writing a will, particularly when it comes to understanding all of the rules of the estate disposition process in your state. Some states, for instance, have community property laws that entitle your surviving spouse to keep at least half of your wealth after you die, no matter what percentage you leave him or her in your will. Fees for the execution of a will vary according to its complexity.

Choose an executor.

An executor is the person who is responsible for settling the estate after your death. Duties of an executor include

• Taking inventory of property and belongings
• Appraising and distributing assets
• Paying taxes
• Settling debts owed by the deceased

The executor is legally obligated to act in the interests of the deceased, following the wishes stated in the will. In most states, any person over the age of 18 who has not been convicted of a felony can be named executor of a will. Some people choose a lawyer, accountant, or financial consultant based on his or her professional experience. Others choose a spouse, adult child, relative, or friend. Since the role of executor can be demanding, it is often a good idea to ask the person if he or she is willing to serve.

If you have been named executor in someone's will but are not able or do not want to serve, you need to file a declination, which is a legal document that declines your designation as an executor. The contingent executor named in the will then assumes responsibility. If no contingent executor is named, the court will appoint one.

Beneficiaries

As you write your will, you need to decide whom you want to inherit your assets to ensure that your possessions are dispersed as you want. Primary beneficiaries are your first choice to receive your assets. You should also choose secondary or contingent beneficiaries. A secondary beneficiary will receive your assets if your primary beneficiary dies before you do or does not meet a condition (e.g. age) for inheritance. Designating a secondary beneficiary can also prevent going through probate, which can be time consuming and expensive. Use specific names, instead of broad categories like "nieces," when naming beneficiaries in your will.

You should also add primary and secondary beneficiaries on your individual bank accounts, the deeds to your homes and cars, contents of your safe-deposit boxes, and investments and insurance policies to make it easier to transfer the assets.

Remember that giving someone power of attorney does not automatically make this person a beneficiary of your assets. After you die, this person will not have the right to the money or even the right to access your account. If you want this person to be a beneficiary, you must state it in your will.

Trusts

A trust is a legal document that states how you, the grantor, want your assets and possessions to be managed and distributed to your beneficiaries. A living trust (inter vivos) is one that a grantor sets up while still alive, while an after-death trust (testamentary) is usually established by a will after your death. Living trusts can be irrevocable (can't be changed) or revocable (can be changed). The most common type of trust is the revocable living trust.

Any person who owns assets can create a trust. However, it does take time to set up a trust, and it requires documentation to transfer your personal assets, bank accounts, deeds, and investments to the trust. It is recommended that you work with an estate attorney or financial planner to create the trust. Find out the licensing requirements with your state's bar, securities administrator, or other regulatory offices. Be wary of pitches for creating a living trust from a salesperson; they could be scams.

Some common reasons for setting up a trust include

• Providing for minor children or family members who are inexperienced or unable to handle financial matters
• Arranging for management of personal assets should you become unable to handle them yourself
• Avoiding probate and immediately transferring assets to beneficiaries upon death
• Reducing estate taxes and providing money to pay for them
• Maintaining your privacy (The terms of a trust are not public record, unlike wills.)

The costs to set up a trust can vary, depending on its complexity and the assets that have to be managed in the trust.

Role of a Trustee

A trustee is the person(s) or company that you choose to oversee your trust. The trust establishes who the trustee is and states the guiding principles that the trustee should adhere to in managing the trust. The trust can be a spouse, partner, family member, financial professional, or bank's trust department.

The trustee is responsible for managing the assets in the trust, even while you are alive but are physically or mentally incapacitated. Upon your death, the trustee gathers your assets; pays any outstanding expenses, debts, and taxes; and then distributes the remaining assets to your beneficiaries.