FREQUENTLY ASKED QUESTIONS
What is Estate Planning?
I often tell clients, that Estate Planning is a process. It is simply the steps you would take to ensure that your property, your money, and your assets go to your family and loved ones in the event of your passing away. The most common legal documents that are used in the estate planning process is the will, and the revocable living trust, often referred to as the family trust.
The issues involved in estate planning involve asking yourself the following questions:
- What are the assets, properties, and money that make up my estate?
- Whom do I want to receive thoses assets, properties, and money if I were to pass away?
- Who do I trust to act as my personal representative to manage my estate if I cannot, because ofmy incapacity or my passing away?
And, a related issues is who do I want to make medical and health care decisions for me if I cannot make those decisions for myself?
Working with an experienced estate planning attorney will provide you with the expert advice you need to create the right estate plan for you.
Who Needs Estate Planning?
What Is Included In My Estate?
What is a Living Trust?
How Much Does a Living Trust Cost?
How Should I Provide For My Minor Children?
Can I Name Alternative Beneficiaries In My Estate Plan?
How Much Does Probate Cost? How Long Does It Take?
The cost and duration of probate can vary substantially depending on several factors including the value of the assets, the complexity of the estate, and the existence or non-existence of a properly executed Will. If the Will is contested or there are disputes with creditors over the debts of the estate, then the probate case may be extended by time and involve significant costs and fees. The most common expenses of the Probate are the Personal Representative fees, attorneys fees (set by statute in California), accounting fees, appraisal fees, bonds, and the court filing fees and costs. On average, these fees run around 8% of the total estate value. In the impacted counties of Los Angeles, Orange, Riverside and San Bernardino, probate cases run around 10-18 months.
What Happens If My Family Member or Friend Dies Without a Living Trust or a Will?
The person who has died without a Living Trust or a Will is said to have died "intestate". The assets are held in the deceased person's name only, and the survivors will have to open an intestate probate proceeding in the Superior Court in the County where the decedent resided. Probate is a legal proceeding designed to transfer the assets in the decedent's name over to the persons entitled to them under the California Probate Code. Under the law, the assets are transferred to the "heirs" of the decedent on a closest of kin basis as designated in the Probate Code.
Will I Lose Control Over My Assets If I Establish a Living Trust?
No. As the creator of the trust, you have 2 powers that give you ultimate control over the Living Trust: The power to amend the trust, and the power to revoke the trust. Also, during your lifetime, as long you have mental competency, you have complete control over the trust as the trustee. This means you can engage in any transaction as the trustee of the Living Trust that you could have engaged in before you established the Living Trust. There is no change in the way you file your income taxes. Because the trust is revocable, you will file a 1040 return under your own social security number just as you did before the Living Trust was set up. If you become incapacitated or you pass away, the Living Trust then becomes irrevocable and the successor trustee takes over the administration of the trust. However, you would have lost control upon incapacity or death without a trust; thus, a Living Trust allows for the same control that you had before you created the trust.
My Spouse and I Own Our House As Joint Tenants, Doesn't That Avoid Probate?
Yes, on the death of the first spouse to pass away; but NO on the death of the survivor. Then the property will have to be probated, and you have not saved any money or time. (Review my video: Estate Planning: The Problems of Joint Tenancy).
What Is The Difference Between a Living Trust and a Living Will?
A living trust is an estate planning document that describes how you want your estate to be distributed if you should pass away. You appoint a successor trustee to manage your financial affairs and settle your estate. A living trust can also provide for the handling of your financial affairs during any period of incapacity.
A living will, on the other hand, is a document that informs others of your wishes regarding life support and other medical care if you become terminally ill. Here in California, the law does not recognize "living wills", instead a document that provides the same kind of instruction by you is covered in the "Advance Health Care Directive".
What Are The Different Kinds of Trusts?
Irrevocable Trust: An irrevocable trust cannot be revoked or amended. These kinds of trusts are very specialized and require professional assistance in creating them. Often the trustee is someone other than person who established the trust, and the trust is designed for the benefit of another third party, who is not the trustee or the person who created the trust. They are often used by high net worth clients or a special needs situation.
Revocable Trust: This is the most common used trust in estate planning. It may be amended and it can also be revoked. It is used to determine the family members and others that are to receive property, assets and money upon the death of the person who created the trust. Revocable trusts also can be used to manage the assets of the trust's creator during his or her lifetime.
Special Needs Trust: This kind of trust is designed to provide funds for a disabled person who is receiving public benefits and would be disqualified from continuing to receive the public assistance under a regular trust or gift of property.
Pet Trust: Under California law, pet owners can provide for the ongoing welfare and care of their dogs, cats, horses, or other animals upon the death of the pet owner. Under a pet trust, the owner selects a trustee to manage the funded money for the care of the pet, and also selects a person who will care for the animal. The trustee and the caregiver may be the same person, or two separate persons.
Can't I draft my own will or trust?
Perhaps. There are pre-printed forms on the internet and in some stationery stores, however, the danger is that if you fail to state your wishes accurately or completely, there may be consequences that you did not intend. Wills in California must comply with certain rules as to their form, and the will you write on your own may not be recognized by the Court. Poorly drafted trusts and wills can land your estate in a Probate Court litigation. Working with a qualified Estate Planning lawyer helps ensure that your wishes are clearly stated and put into the most enforceable form possible.
Will I have to file an income tax return for my living trust?