What is a "comprehensive estate plan"? A comprehensive estate plan is comprised of your trust, will, durable power of attorney for management of property and advance health care directive (also known as a living will or durable power of attorney for healthcare).
Who needs an estate plan?
Everyone needs an estate plan.
What happens if I become incapacitated without having an estate plan? If you are deemed legally incapacitated, as certified by two separate physicians, of no relation to you, specializing in the specific type of disability and/or incapacity you suffer, a conservator needs to be appointed to act on your behalf. Your conservator "steps into your shoes" and acts on your behalf when you are not capable of doing so. This process can be slow and very expensive, thousands of dollars.
How do I avoid the conservatorship process? While you are alive
and have capacity, you should retain an experienced estate planning attorney
to prepare your durable powers of attorney. These
documents enable you to select the individuals you know, love and trust, to act on your behalf when you suffer from incapacity.
What happens if I die without a will or a trust? If you die without having a will or trust in place, you die "intestate". Intestate is the process where the State of California has devised a statutory distribution scheme (known as intestate succession) directing the distribution of your assets at your death. Depending on how you hold title to your assets, your assets will go through probate.
What is probate? Probate is the judicially supervised process of changing title of your assets from your name to your beneficiary's name.
What detriments, if any, correspond to the probate process?
► Probate is a Lengthy and Slow Process. Depending upon the size of your estate, probate may take anywhere from nine months to three years (the larger your estate, the longer the probate process takes).
► Probate is a Public Process and Unscrupulous Companies May Solicit Your Loved Ones Into PUrchasing Bogus Investments. Probate is a public process and the public at large has access to your files upon your death. This is problematic because your beneficiaries (e.g., your children, grandchildren and other loved ones) mailing address will be made a public record in addition to the assets they are receiving from your estate. There are unscrupulous businesses in the business of preying on your loved ones during a devastating time. For example, if your only daughter, Sally, is heir to your estate in the amount of three million dollars, Company Unscrupulous has access to pulling your public probate file, locating Sally's home address and telephone number and contacting her on the premise that you were in the process of purchasing life insurance for her. Company Unscrupulous will attempt to manipulate your daughter into purchasing a life insurance policy you never considered purchasing and she will likely purchase it in your memory. There are scam artists out there and your beneficiaries may be sought out by such unethical companies.
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► Expensive.
Probate is an expensive process. Court costs and court filing fees
continue to rise every year. Attorney fees are based upon the GROSS
value of the decedent's estate, not NET.
► What if I have
a Will? Regardless if you have a will or do not have a will, your
estate is still subject to the probate process. Having a will does not
avoid probate, it guarantees it.
► Probate is Unnecessary. Probate is completely unnecessary with a properly funded estate plan. By having your assets titled in the name of your trust, a "successor trustee" (the person you select to manage the distribution of your trust estate upon your death) gathers all of your debts and liabilities, assets, pays your state, federal and federal estate taxes, reviews your trust and distributes your trust assets to the beneficiaries of your trust. Your successor trustee takes the place of a judge in the probate process. Your successor trustee may distribute your trust estate within four months!
What is a trust? A trust is a document similar to a contract. Your trust specifies who you want to "step into your shoes and act on your behalf" if you are alive but legally incapacitated and your trust dictates the manner and method of distribution of trust assets when you pass.
► Assets Titled in Your Trust Avoid Probate. Your successor trustee is under a fiduciary duty to distribute your trust assets. Assets titled in the name of your trust avoid the probate process, court costs, court filing fees and statutory attorney fees.
► Minor Children. If you have minor children, you can distribute trust funds to them for their basis needs, including your child's health, education, maintenance and support. You may further provide at what ages you want your children, grandchildren or other minor beneficiaries to receive trust fund distributions, e.g. 1/2 of trust principal upon obtaining a bachelor's degree from an accredited four year college or university or at age 25, whichever occurs first, and the balance upon obtaining a master's degree from an accredited college or university or at age 30, whichever occurs first.
► Beneficiaries with Special Needs. If your loved one has special needs and is receiving state and/or federal disability or may receive disability at a future date, you may set aside funds in a special needs trust. A special needs trust enables an individual to set monies aside for their loved one in trust. Since the monies are titled in the name of the trust, the disability should not be terminated since assets are not titled in the individual's name.
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► Animals. If you have animals, you may specify who you want to care for your animals when you pass away. You want to ensure your animals are placed with someone who will love and nurture them and not euthanize them except in case of a medical emergency. If no one is able or willing to care for your animals, you may direct your animals be placed in a "no-kill" animal shelter.
► Do I Lose Control of My Assets by Placing them in Trust? Absolutely not, you may add assets to your trust at any time and remove assets from your trust at any time so long as you have capacity to control and manage your assets.
► Can I Change the Provisions of My Trust? If your attorney drafts a revocable trust you may amend or revoke the trust at any time and for any reason so long as you have capacity to do so. (Note: If you are married, you may have certain assets funding an irrevocable trust when the first spouse passes. If this is the case, the provisions of the irrevocable trust cannot be changed.)
Which document enables me to select guardians for my minor children? Your will enables you to select guardians for your minor children. You will want to list several choices in the event your first choice is unable or unwilling to care for your minor children.
Can my spouse and I draft a mutual trust but maintain the status of our separate property? Absolutely, it is imperative you inform your estate planning attorney of any and all separate property assets and your intent to maintain separate property status.
We have a blended family. Are there any issues to be concerned with? Absolutely. California does not recognize step-children as biological children. At a minimum, blended families need will wherein each spouse recognizes and identifies their children and their step-children and state their intent to treat all children the same. Otherwise, for example, if mom has three children from a prior marriage and mom dies first, then upon husband's death (assuming husband had no will or trust acknowledging his deceased wife's children) under the intestate statute, husband's children would inherit the entire estate and wife's children would not inherit anything.
Our parents have us on title to their home to ensure we inherit when they pass. Is this a problem? Yes, in fact, this is the worst way of trying to provide for your children. If you own property in common with your children while living, your children, upon your death, will lose the "step up in basis" and will likely realize capital gains tax on your interest passing to them. If your children inherited your property at your death, any and all capital gains is forgiven and your children would not realize any capital gains tax upon sale of the property.
Who needs an estate plan? Everyone needs an estate plan. Please contact our firm for a free consultation to analyze your specific situation and estate planning needs.
Your Life Team of Core Experienced Professionals and Planners. Estate planning is one aspect of "life planning". You should ensure you retain a professional, competent "team" to review your affairs, including but not limited to, a certified financial planner regarding your financial planning and retirement planning, a certified public accountant regarding your tax planning, an insurance broker regarding your insurance needs to ensure you are adequately insured, a corporate attorney regarding your corporate needs and corporate compliance, and other core professionals. If you would like the contact information of a professional "team member" our firm trusts and utilizes, please feel free to inquire. If you have other needs and would like the contact information for a competent attorney specializing in a particular area of law, please feel free to inquire.
Our professional goal and dedication to you is to ensure you plan now so your loved ones do not pay later!
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