The objective of estate planning is to transfer the asset efficiently in cost and time to the intended beneficiaries in a way you want them to receive it.
Although you may transfer the assets by will or to the heirs by state law (“Probate Transfer”), Probate Transfer process is time consuming. According to California probate code, personal representatives must close the probate process within one year unless they file a federal tax return (§12200). Depending on the complexity of the estate, the process might take years to resolve. Because of the time gap between your death and the receipt of the assets, the assets cannot be maintained properly during the period, and it makes your assets’ value deteriorates.
Probate Transfer process is costly. California probate code section §10810 allows personal representatives and attorneys for personal representatives to receive compensation based on the value of estates. Further, the probate cost includes filing fee, appraisal fee, bond, accounting and legal fee which could be increased extremely due to the size and complexity of the estate.
Even in tax issue, you would lose your assets not only by estate tax but also by generation skipping tax if you bequest the assets to your grandchildren.
Furthermore, you can control a way you want the beneficiary to receive your assets. Non-Probate Transfer process is more flexible because, for example, you can control the time and manner of distribution by trust to your minor or spendthrift child. You can control who will not receive the benefit, for example, by keeping children’s spouses from the beneficiaries. By an estate planning you can transfer the asset to the intended beneficiaries in a way you want them to receive it.
Note that not everyone needs an estate planning maybe because of the size or type of the assets you hold. Whether you need an extensive planning or just need a simple setup depends on individual situations. Now may be the time to talk to the attorney to consider your situation.
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