Who Needs Estate Planning? EVERYONE! Regardless of your net worth, marital status, age, or gender. Estate planning allows you to plan for incapacity and death. By creating a living trust, you can avoid the need for conservatorship and probate, both of which are time-consuming, intrusive, and expensive.
Our Estate Planning attorneys focus on crafting customized plans to achieve our clients’ goals for disposition of assets, wealth preservation, and tax minimization. We work to promote family harmony and to create a smooth transition of assets using Revocable Living Trusts and Wills, Family Limited Partnerships and other entities.
Trusts are an important part of estate plans for most Californians. If you own non-retirement assets valued at more than $150,000, or real property valued at more than $50,000, you should consider setting up a trust. Trusts allow your estate to avoid probate, which is a slow, public process in which all of your assets are disclosed in public records along with the name and address of everyone who will receive those assets from you.
A probate administration typically takes more than a year to complete before your beneficiaries will receive the assets and can be very costly. Fees are imposed on the gross value of your estate (not the net), and an estate with a gross value of $1 million can pay $23,000 or more in fees to each of the executor and attorney, in addition to court costs and appraisal fees.
Creating and funding a Trust allows you to maintain the privacy regarding your assets and the ultimate disposition of your assets, as the Trust is not a public document. The assets can also be distributed to your heirs with fewer delays as court approval is not needed.
All basic estate plans should include:
- Living Trust
- Pour Over Will
- Advance Health Care Directive
- Authorization to Release Medical Information (aka, “HIPAA Waiver”)
- Financial Power of Attorney
The Trust contains instructions regarding the management of assets during your life, and the disposition of your assets at death. It should also identify the trustee, the individual or institution who will manage and distribute the assets.
If you have a Trust, the main purpose of your Will is to “pour over” to your Trust any assets not held in Trust at your death. The Will also names the guardian for your minor children.
An Advance Health Care Directive provides instructions regarding your medical care during life and the disposition of your remains upon death. This document can make getting the care you want and need easier and less stressful for you and your family.
The HIPAA Waiver is essential under current Federal and California law which otherwise prohibit your doctors and other care providers from discussing your personal medical information with others.
Finally, a financial Power of Attorney allows your agent to manage non-trust assets if you are not available due to travel, injury or incompetence.
Estate planning techniques allow you to arrange how your assets are distributed at death. This can include creating trusts for young or disabled beneficiaries. You can also determine who will manage your estate as trustee or executor. Without a Will or Trust, your assets may be distributed under your state’s intestacy laws, which may not be what you desire.
You can plan your estate to pass to your designated beneficiaries in a way that protects it from the beneficiaries’ creditors, divorce proceedings, and may even avoid estate tax at their deaths. This is called Generation Skipping.
We can help clients create charitable trusts and private foundations to meet planning and philanthropic goals. We can assist in implementing gifts, Irrevocable Trusts, Qualified Personal Residence Trusts, and other techniques.
Many estate planning techniques are designed to reduce or eliminate estate taxes and protect assets for future generations. We would be pleased to discuss these techniques with you.
What is a Revocable Living Trust?
A Revocable Living Trust is an arrangement by which individuals (the Trustors) transfer legal title of their assets to the Trustee of the trust. In California, the Trustors often act as the initial Trustees of the trust and so maintain complete control of the assets during their lifetimes. The Trustors can thus continue to buy, sell, borrow against or transfer assets at any time. A Trustee is required to manage the trust property according to the terms in the trust document. The trust terms, including the disposition of assets at death, and the persons named as Trustees, may be changed by the Trustors.
Living Trusts can also be used to ensure that both the surviving spouse, and any child from a prior marriage, receives fair treatment and protection.
What are the advantages of a Revocable Living Trust?
- Eliminates the needs for a conservator: If you become disabled or are otherwise unable to manage your estate, a properly funded Living Trust typically allows you to avoid the need for a court-supervised conservatorship. This is because the successor Trustee named in the Trust can step in and manage your affairs without court interference, loss of privacy, and/or the expenses of a conservatorship.
- Avoids probate: At your death the assets held in your Living Trust pass directly to the beneficiaries named in the trust, according to the terms set forth in the trust instrument. Ordinarily, there are no court costs associated with trusts, and there are no court-ordered executor or attorney’s fees. Assets can usually be distributed with minimal delays, and the terms of your estate plan remain private.
- Additional benefits of a Revocable Living Trust: A Living Trust can provide for the care, support and education of your minor children or other young beneficiaries by providing continuing management of the assets by the Trustee. The assets can be distributed to the children at the age or ages chosen by you. This also avoids the costs and burdens, and loss of privacy, associated with a court supervised guardianship for minor beneficiaries. A continuing trust can also be helpful if a beneficiary is or becomes disabled and/or receives government benefits.