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1520 6th Ave
San Diego, CA, 92103
United States

(619) 320.8780

San Diego law firm focusing on estate planning including preparation of trusts, wills, and powers of attorney, trust administration, probate, business formations including partnerships, limited liability companies, and corporations, business succession planning, bankruptcy, business litigation, employment law, and general civil litigation.

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Not Everyone Needs a Trust, but Everyone Needs a Plan

Casey OConnell

When most people hear the term "estate planning," they think only the wealthy, the well-off, the millionaire or billionaire need concern themselves with such a process. This common sentiment is a falsehood. Everyone should have a plan in place for the unlikely event of incapacity or death, regardless of your level of wealth. Another widespread misconception is that the goal of estate planning is solely to avoid death taxes. This myth is refuted in the following statistic:

  • In the U.S. in 2012, out of the 2.5 million deaths throughout the country, only 3,738 estate tax returns were filed for taxable estates. 

This means that merely 0.15% of all decedent's estates were subject to the federal estate tax. This statistic is a product of the large estate tax exemption of $5,000,000.00 per individual ($10,000,000.00 for a married couple) adjusted annually for inflation. Thus, in 2014, a decedent's estate can be valued at up to $5,340,000.00 without paying estate taxes at death (depending on the gifts made during the decedent's lifetime). Most people do not have estates of this size, but this does not eliminate the need to plan. 

Depending on each individual's circumstances, planning can be accomplished through the use of a trust, a pour-over will, and other ancillary documents such as powers of attorney. Despite the pervasive discussion of trusts as an effective estate planning tool, and indeed they are, trusts are not always necessary.

For those of us who do not own real property, who do not have children, or at least minor children, and whose estates are modest (a great majority of people), the need for a trust diminishes. In this instance, a stand-alone will (meaning there is no need for a trust) and powers of attorney are sufficient. 

In fact, in California, in the event a decedent's gross estate at the date of death does not exceed $150,000.00, an affidavit can be filed with the Probate Court to avoid the probate process. As a result, one of the biggest advantages of having a trust - probate avoidance - is achieved through this simple procedure. The decedent's assets would then be distributed pursuant to his or her will without incurring the expenses and enduring the procedural steps of probate. Don't be susceptible to the common and often incorrect view of estate planning. If you want to plan for incapacity and death, how to devise your assets no matter the value, and how to care for your remains at death, contact our office today to discuss your options. Note, the above analysis is fact-sensitive and an individual consultation is recommended to determine the best course of action for you.