Yesterday we looked at what happens when you die without an estate plan, and the terrible position you put your family in at an already difficult time. Now, let’s look at the flip side. What happens when you die WITH an estate plan. I think you’ll be surprised at the stark difference between the two. Think of it this way: what would you like YOUR loved ones to do for YOU?
Often, we think that we don’t care or it doesn’t/won’t matter what happens to our estate once we’re gone because, well, we’ll be gone. But this is an attitude that can cost your estate tens or hundreds of thousands of dollars as well as cost your family a lot more grief than they already will be experiencing. Don’t do this to your family: make a comprehensive estate plan so your family doesn’t go through what I describe below:
Here is a video on what a revocable living trust is, and why you would want one. As the centerpiece of my comprehensive estate plans, the living trust allows your estate to pass to your heirs without the hassle and expense of probate. In California, an estate worth $100,000 or more gross (the total value of your estate not taking any debt into account) is going to probate. Probate is the court process of assessing your property, paying your debts, and distributing the reminder of your estate to your heirs. The problem with the probate process is that it can take years to complete (all the while your property is tied up in court), can cost 8-10% of your gross estate (just think – if you just have a house worth $400,000, the total probate fees could cost up to $40,000!), and is a public process. I’ll be posting another video on probate and why we want to avoid it. A living trust avoids probate – your estate passes without any courts or lawyers or judges. This is critical to protect your loved ones and your estate once you’ve passed on.