We all want to leave some inheritance to the people we care about when we die. This, in part, explains why you work hard after all. And as you create your wealth, one of the most important decisions you need to make is creating an estate plan.
Probate is the legal process whereby the court validates your will and oversees the distribution of your assets according to your wishes (or according to California intestate laws if you had no will) when you die. However, probate is a costly and lengthy process. From probate fees to estate taxes to legal fees, probate can eat up a huge chunk of your estate. This explains why you might want to reduce the cost or eliminate probate after all.
Here are two steps you can take to reduce the cost of probating your California estate.
Set up a trust
A trust is a fiduciary arrangement that allows you to transfer certain assets into the custody and management of the trustee on behalf of your designated beneficiaries. All assets that are held in a trust are never subject to probate. Rather, they are directly transferred to the designated beneficiary as specified by your trust instruments. Better still, you can avoid certain estate taxes by setting up an irrevocable trust.
Hold your assets in joint tenancy
Assets that are held in joint tenancy, like cottages and homes, automatically pass down to the surviving joint tenants upon your death. However, this arrangement can lead to complications, especially if the joint tenant is not your spouse or family. Be sure to understand the pros and cons of a joint tenancy before opting for one.
You have worked hard for your wealth. The last thing you want is to have a huge chunk of it going to the government or other parties thanks to probate. Find out how you can protect your assets from costly probate.