It Can Be Bad if You Don’t Have a Will, Trust, or Durable Power of Attorney

Don’t have a Will? Maybe not terrible, if you have minimal assets defined as personal residence or other assets with a total value under $184,500, a so-called “small estate,” and your intended beneficiaries match the default laws for intestate succession. If you are married, all community property will go to your spouse, nothing to children. In case of separate property, without children the spouse will get only a portion, and the rest will go to parents or siblings. If minor children inherit, there will likely be a Guardianship with the expense of ongoing Court involvement until a child reaches age 18. If what you want is different from the default plan, not having a Will is very bad.

Don’t have a Trust? Very bad if you own real property or have assets above the threshold for a small estate. This could land your estate in a probate which is a Court proceeding that will tie up your estate for up to year or longer and be very costly for your heirs. The Executors’ Fee and the legal fees are set by statute as a percentage of the value of the assets. For an estate with an $800,000 condominium, the total combined fees for the Executor and the legal fees would be $38,000.

Don’t have a Trust, but not all your assets are owned in the name of the Trust? It depends. A small bank account can be transferred to the Trust after death using the “Small Estate Affidavit.” But if the value of assets not in the Trust exceeds the small estate threshold, those assets may need to be probated. The effort and expense of setting up a Trust to avoid probate may be all for naught.

Don’t have a Durable Power of Attorney? Very bad if you were ever to experience incapacity. We think of estate planning in terms of ordering our affairs in case of death. But we forget the very real possibility of incapacity that can happen at any age. If a person becomes incapacitated without a durable power of attorney, there may be no way to access the person’s bank accounts, no ability to arrange for and pay for care. It is the last resort, but without a durable power of attorney, a Conservatorship through the Court may be required. Very bad.

Planning Ahead Column

By Lisa Alexander, Esq.

JAKLE, ALEXANDER & PATTON, LLP

Direct Line: 310-656-4310