Estate Planning

Estate Planning

Do I need a living trust?

Yes, unless your estate is worth less than $150,000 and you do not feel the need to protect yourself in the event you become incompetent.

A properly prepared Living Trust Estate Plan avoids court conservatorship proceedings by permitting you to designate your own agent to handle your personal and financial affairs in the event you become incapacitated. If your estate is over $150,000 on your death, under California law, a Probate Case is required, unless those assets are held in a Living Trust or they are held in Joint Tenancy or they have a beneficiary designated to receive them upon your death.

How does a revocable living trust work?

California law requires a Probate if you have $150,000 or more worth of assets held in your name alone at the time of your death. The transfer of your residence and any other real property you own, along with all of your personal property and any substantial savings or investments directly into your Trust name, leaves your estate with assets under $150,000 left in your own name and the need for a Probate proceeding upon your death is avoided. The most crucial work involved in drafting a Living Trust Estate Plan is to properly fund the Trust and for the attorney to make sure the client knows how to use the Trust to avoid Probate – simple rules, but they must be understood and followed.

What about estate taxes?

Fewer and fewer people have to worry about the government taxing their estates: The floor for estate taxes is $5,490,000 (net) per person for someone who dies in the year 2017. A small annual adjustment to that figure is added on each year thereafter

Does a Will avoid Probate?

No, unless your estate is worth less than $150,000.

Details: California law requires a Probate proceeding if you’re worth more than $$150,000 at the time of your death. A Will merely allows you to designate who the court appointed representative (Executor) for your estate will be and how your estate will be divided – there is still a long, public, expensive Court case in the Probate Court required to settle your affairs.

What are the costs of Probate I can avoid with a Living Trust Estate Plan?

Attorney’s fees in a California Probate Proceeding are currently $4,000 of the first $100,000 in assets, $3,000 of the next $100,000 in assets, and 2% of the next $900,000 in your estate. Accordingly, you will incur $13,000 in attorney’s fees for a $500,000 estate and $23,000 in attorney’s fees for a $1,000,000 estate. You can double those fees if your Executor chooses to charge for their services, so we are talking about $25,000 for a $500,000 estate and $50,000 for a $1,000,000 estate, in addition to court costs/fees (typically $1,000 – $3,000 depending on the size of your estate) and an average of 12 to 18 months in a court proceeding.

What are the most important things I need to know about a Living Trust?

A properly prepared Living Trust will avoid Probate, a long, expensive, public case to settle my affairs/distribute my assets. A heavy percentage of Living Trusts prepared do not accomplish that goal, usually because assets are not properly funded into the Trust and the client does not have a working knowledge of how to use their Trust,

Never have an important legal document such as a Living Trust prepared by a non-attorney, and certainly not by a non-attorney (usually through a seminar) who is a life insurance or annuity salesman -their primary motivation is to sell you an investment plan through their office.

What documents do I need to gather in order to start preparation of a Living Trust Estate Plan?

• A Deed to any property/land you own
• A Property Tax Bill for any real property/land you own
• The name, address and phone number for a first, second, and third choice Executor/Successor Trustee/financial care agent
• The name, address and phone number for a first, second, and third choice Healthcare Agent to handle any medical decisions you are unable to handle yourself
• A copy of your Mortgage Loan Statement for your residence (as formal notice is required to be given to your mortgage lender when you transfer your home into your Trust)
• Have a general outline of where you wish to have your estate distributed upon your death

What is involved in administering a Living Trust after death?

A Living Trust Estate Plan is private (not a public court case), out of court and fairly inexpensive process to follow. Depending upon the nature of your estate, the complexity of assets in your Trust, whether you have outstanding creditors (bills due at your death), and whether anyone has legal grounds for challenging your Living Trust Estate Plan, the costs vary. You typically pay for such services on an hourly basis.

The information contained herein is general information about the law only. The law is subject to change. If you have a specific legal question and want your question(s) answered, consult with an attorney.