Living Trust Alternatives Attorneys in Los Angeles
Alternatives to Living Trusts: Faster, Cheaper, and Not Worth It
We are often asked if there are cheaper alternatives to a living trust with a pour-over will that we recommend. The answer is yes, there are less expensive alternatives. However, we also advise that estate planning deserves full consideration as it can ensure that your family members have the financial resources they need after you pass away.
For example, many people believe that they can draft their own will, sign it in front of two disinterested witnesses, and all will be well when they pass. Having a valid will in California does not guarantee that your assets will not be subject to the probate process. After you die, the last thing you want is for your loved ones to end up in probate court.
If you do not have a will or other estate planning documents that dictate your final wishes, your assets may not be distributed according to your final wishes. In other instances, lack of proper estate planning can lead to disputes among your heirs and beneficiaries.
If you are interested in learning more about effective estate planning strategies, contact Gomez Law, APC, today to schedule a free consultation.
Is Joint Property Ownership a Good Alternative to Creating Living Trusts?
Another common estate planning strategy is to maintain or create joint property ownership between a parent and their child/children. At first, it may seem like the easy, money-saving way to go: simply add your children to the deed of your home as “joint tenants” and then bypass the time and cost of estate planning and the probate process.
There are several significant disadvantages to adding your children directly to your deed. One of these is that the property could be reassessed if the deed is drafted correctly, leading to much higher property tax bills for heirs. Another legal issue often involves capital gains taxes. For example, what if you purchased your home for $100,000, later added your child’s name to the deed, and then passed away when the property was worth $400,000? If that child later sells the house for $500,000, the child would be taxed on a capital gain of $400,000 instead of $100,000, a significant difference and a costly mistake.
The best method to protect yourself and your family members from creditors or estate taxes is to work with an estate planning professional who can help craft a custom plan that will provide you with maximum benefits.
What are the Potential Risks of Having a Joint Bank Account With My Children to Avoid Probate?
Some individuals choose to set up joint bank accounts with their children to ensure they can easily access financial resources. Although creating joint accounts is faster and easier than setting up the proper estate planning documents, it ultimately yields a far inferior result.
For example, let’s say you add your son as a co-borrower to your checking account. Possible problems down the line include:
- Borrowing – If your son gets into a financial bind, it would be very tempting to “temporarily borrow” from your checking account… and later “forget” about paying it back
- Sibling rivalry – If you have multiple children and you pass away, under the law, your son gets to keep everything in account. This arrangement can and likely will lead to a family court fight
- Bankruptcy – If your son’s financial problems appeared hopeless, he might file for bankruptcy. Since his name is on your bank account, the bankruptcy can claim some or all of your assets to pay off his creditors
- Divorce – If your son filed for divorce, his spouse could claim the joint assets as part of the marital estate. If you wanted to buy or sell something, your son’s soon-to-be-ex might well need to sign off on the sale or mortgage
How Can Your Law Firm Guide Me Through Estate Planning Options?
Another, less expensive alternative to having a living trust drawn up, although not significantly more affordable, is a revocable transfer-on-death deed, as well as other so-called transfer-on-death designations. These options might work for small estates, where the ‘tangible personal property,” such as furniture and jewelry, is under $150,000 in California, which allows for a simplified probate proceeding.
However, beneficiary designations are easy to overlook, which can result in accounts being transferred to the wrong individuals after changes occur during your lifetime. For example, your ex-wife or your mother may wind up with an account that should have gone to your current spouse. Another problem can occur if a beneficiary dies before you, which means the asset may need to be probated after all.
Hopefully, the examples above have alerted you to the perils of trying to cut costs in your estate planning. In other words, you don’t want to be penny-wise and pound-foolish. Gomez Law, APC, addresses your concerns about the expense of comprehensive and proper estate planning by offering a package deal to handle all common scenarios, both during your lifetime and after your passing: a living trust, pour-over will, durable power of attorney, and advanced health care directive.
What are the Benefits of Proper Estate Planning?
Due to the complex laws involved in the probate process, you must create a viable estate plan to ensure your loved ones are cared for after your death. Although many individuals try to look for affordable alternative methods to avoid the probate process, the best option is to hire an estate planning attorney to help you plan for the future.
Estate planning has several significant benefits, especially if you have minor children. For example, with estate planning, you can transfer assets into a revocable living trust, which is managed by a trustee. In many instances, the individual who creates the trust appoints themselves as trustee and also appoints a successor trustee, sometimes a surviving spouse, who will manage and distribute the assets after their death. Depending on the circumstances, you may also wish to establish a special needs trust for a family member, allowing them to access financial resources while still qualifying for government benefits.
Other benefits of proper estate planning include assigning a person you trust to be your power of attorney to help avoid potential guardianship or to make medical decisions should you become incapacitated. To learn more about how estate planning can assist you, contact our living trust alternatives lawyers to learn more about our legal services.
Why Should I Choose Gomez Law, APC for My Estate Planning Needs?
Gomez Law, APC, is a full-service real estate law firm representing families, businesspeople, homeowners, landlords, and tenants, with offices throughout Southern California. This article is informational only and should not be used as legal advice. Before taking action, we recommend consulting with one of our attorneys to discuss your specific situation and ensure you and your family have a plan that will help you face the future with confidence.
To learn more about our legal services, contact Gomez Law, APC, today at 213-772-6404 to schedule a free initial consultation, and we can begin working on your case.