What is an “estate”?
An “estate” is all that a person owns at the time of their death–real estate and personal property. For example: personal residence; vacation home/condo/time-share; IRA’s, life insurance; bank accounts, stock brokerage accounts; paintings and jewelry, etc.
What is estate planning?
An estate plan is simply a plan to look at all the assets owned by an individual or couple, consider their objectives for transferring such assets in the event of their death, and help with the smooth transfer of such assets to loved one’s with a minimum of taxes, expenses and inconvenience.
Isn’t estate planning just for the very wealthy?
No, estate planning is not just for the wealthy. Although there is a common misconception that “estate” planning is only for the extremely rich, simple estate planning is extremely important even for low value estates, especially for anyone who has minor children, owns real estate, or owns assets worth over $150,000. Estate planning helps avoid the extremely high fees and hassles of probate that will drain even low value estates.
What happens if I die without an estate plan?
The state will decide how your property is distributed if you do not make an estate plan. Also, in almost all cases, your estate will be greatly depleted by its having to pay huge probate fees, court costs, and attorneys fees that arise upon a person’s dying without an estate plan.
What Does Your Estate Plan Package Include: Whether you are trying to leave your hard earned estate to your children, or are just trying to minimize estate taxes upon your death, our estate plan package can help you meet your goals. Our basic package includes a Revocable Living Trust, Pour Over Will, Durable Power of Attorney for Finances, Advance Health Care Directive, HIPPA Medical Release Authorization, one property transfer deed, and other documents as required. In almost all cases, we charge low flat fees. Make an appointment for our free consultation to learn more about how we can help you complete your estate plan.
LIVING TRUSTS AND AVOIDING PROBATE
Will vs. A Living Trust?
If you die with a will, although the will helps the court determine your wishes as to who will get your estate, your estate still has to go through a long and expensive process called probate before any of the assets are passed on to your loved ones. The probate process can take deplete 4-5% of your estate, and keep all the assets tied up for a year or two before resolution. A Living Trust, on the other hand, allows you to avoid probate proceedings, and its high costs and delays. A Living Trust allows your assets to transfer relatively quickly, most of the time within weeks or months. Living trusts also allow privacy, whereas a will allows all of your personal information to become part of the public court records, accessible to anyone in the world. Living Trust also have much more flexibility and allow various beneficial estate planning tools to be used which can provide tax and asset protection, creditor protection and other benefits making them the preferred estate planning method in almost all cases.
What Is A Living Trust?
There are various types of Living Trusts, but a basic Living Trust is a tool which allows the transfer of your assets to your heirs without costly and protracted probate proceedings. A Living Trust is a legal entity that, upon your death, transfers designated assets outside of your probated estate. The assets are held in the name of a legal entity called the trust for the benefit of yourself (until you die or become incapacitated) and subsequently for your appointed beneficiaries, so those persons do not technically own them. A revocable living trust enables you to control your estate while alive (revoke the trust, access assets, alter the beneficiaries). It is also more specific than a will in indicating to whom, when and how assets are distributed.
Benefits of a Living Trust
- No probate The probate process usually takes a minimum of 9-12 months, and often much longer, consumes a percentage of the assets and is public record. Trust administration is quick, inexpensive and completely private.
- Creditor protection Upon your death, the assets are transferred (not directly to your beneficiaries) to a trust(s) that will help to protect your beneficiaries from creditors and predators (divorces).
- Estate tax reduction Your spouse is exempt from estate taxes (up to a marital exclusion amount). When that spouse dies, your children become beneficiaries of the remaining trust assets, eliminating or minimizing estate taxes.
Attorney vs. Websites to draft a Living Trust?
Do I need an attorney for a Living Trust? Yes, if you want a plan that is done right for your individual and family circumstances. All these advertised websites and paralegal services are NOT licensed Attorneys and are NOT allowed to give you legal advice or answer your questions. Although they imply that they stand behind their documents, in truth, they provide no guaranty that their documents will work. They provide only “fill in the blank” documents to all clients, at a low price, which may miss an important issue for your estate plan. If you want to speak to an attorney, they charge more, if you want to add a document, they charge more, if you need a notary, you are required to find your own and pay for it. If you added up their fees for each document that is already included in our comprehensive package, you would find that the fees are similar, however with us, you get experienced, licensed California attorney to assist you in customizing your estate plan to suit your individual needs.
If both my husband and I die at the same time like in a car crash, is there a way to make sure that my minor child does not receive a large amount of money upon turning 18?
Yes. In order to delay a minor child’s inheriting money immediately upon turning 18 (an age at which irresponsible spending is quite likely), a testamentary trust can be created which can designate the age at which a child would receive the distributions. Often the distributions are spread out, such that partial distributions are made to the child at age 25, 30, and 35. Also, conditions on distributions may be included, such as requiring that the child obtain a college degree.
Can I name the same person as guardian and as trustee for the testamentary trust set up for my minor children?
Yes. Many people choose the same person to act as guardian and trustee. However, many others name a different person to act as trustee of the trust. It depends on the overall characteristics of the person chosen as guardian. The guardian may have the best parenting skills, but may not be good at managing money. If you have concerns that the guardian may not be able to manage and make distributions under the trust according to what is specified, then naming another to act as trustee is advisable.
Can I purchase estate planning for my adult children?
No, not unless the children themselves contact the attorney to initiate or independently agree to be represented by the attorney. Creating an estate plan creates an attorney-client relationship between the attorney and the client, thus the client must be the one who retains the attorney. Anyone seeking to have their adult children complete estate planning may send the link to JD law to their children and/or encourage them to contact us for a free consultation to discuss their needs.
I have a handicapped son with special needs. Is there something I can do with an estate plan to protect his interests?
Yes. You may create a special needs trust along with your will that will include a comprehensive care plan for your special needs child with a trustee to manage the trust according to its terms.
I do not have any remaining family or friends to whom I wish to give my estate upon my death. I would like for it to be transferred to a charitable institution upon my death. Can I do this?
Yes. You may include language in your will or living trust that transfers the remainder of your estate to a charitable or non-profit organization of your choosing.
I am recently divorced. Does the divorce automatically cancel out the will and other related documents that we had made when I was married?
No. Absolutely not. A divorce does not automatically cancel out the will or living trust. It is imperative that, following a divorce, you have your entire estate plan reviewed and updated. Many divorcees neglect to update their plans, inadvertently leaving their ex-spouses to inherit sometime large sums of money and property that was intended to go to someone else.
Where should I store my estate planning documents?
Where to store the documents is a personal decision for each family. Many clients keep their estate plan documents in a regular desk file at home; others keep them in a fire proof safe at home. It is advisable to, at the least, advise executors as to where the estate planning documents are located, and some even provide the executors with copies. Upon your death, it can be extremely helpful to executors and family members to keep a Master Document File in with your estate planning files. For more information, you visit organizing important documents and keeping a Master Document File.
