Comprehensive wills accomplish at least three fundamental estate planning objectives for parents. A well constructed will:
- Appoints guardians for minor children.
Parents need a will to ensure that their children would be cared for by the person they believe would raise their children in a rich and nurturing environment. If both parents die without a will, the child's fate is turned over to the courts which have neither the knowledge nor the interest to do a terrific job of appointing guardians for orphans.
- Protects the estate from unnecessary taxes.
A well-drafted will allows parents to pass up to $5 million each to their children without incurring estate taxes and will create structures to reduce taxes on estates with assets of more than $10 million.
- Preserves capital and provides income for the children.
A well-drafted will for families with young children should establish a trust that allows a trustee to manage property left behind, defray the costs of raising the children, provide for their education and ultimately distribute the assets to the children in a responsible way.
Wills created at Finch Montgomery Wright effectively address these issues. Tax savings and asset management for children can be easily accomplished through a will. Most importantly, for parents of young children, a will is an effective way to appoint a guardian. All in all, wills provide a sensible vehicle for ensuring that the costs of estate administration and the needs of minor children are balanced against the initial cost of the plan.
Wills have other advantages and disadvantages. On the positive side, the court is looking over the shoulder of your estate administrator. This safeguards against executor wrong doing. Wills also have a prescribed period for creditor's claims. Once that time is past and the court issues its order, the claims of creditors are wiped out. Finally, because spouses do not face onerous probate proceedings, wills effectively pass property to the surviving spouse, outside of probate and at minimal cost.
The one thing that wills cannot accomplish is probate avoidance. While the surviving spouse may avoid probate fees, assets passed to children will not. Any estate over $100,000 is subject to probate proceedings. Probate is time consuming and expensive. In most metropolitan areas in California it takes a relatively uncomplicated estate 6 to 18 months to move through the probate gauntlet. All of this delay creates additional expense. California probate proceedings typically consume between 3% and 6% or more of the gross value of the probate estate. Living trusts are still the most effective way to avoid probate in California.