Estate Planning FAQs

 

What is an estate and what is estate planning?

Your estate is everything you own. At your death, your estate lives on. Bills keep coming in, taxes must be filed, money owed to creditors must be paid, and money that was owed to you must be collected. How your estate is managed and distributed to your heirs and beneficiaries upon your death will depend entirely on whether you planned for this event. An estate plan ensures that your estate is managed and distributed in accord with your wishes. A quality estate plan goes one step further, ensuring that if you become incapacitated, your health care and financial decisions will be made in accordance with your legally enforceable wishes.

 

What happens if I die without an estate plan?

Approximately 60% of Americans die with no estate plan in place — not even a will. If you die without a will, intestacy laws determine how your estate is managed and distributed and the probate court will oversee the process to ensure the proper procedures are followed. Bringing a matter before a probate court is a timely and expensive process that can prevent your heirs from accessing much needed assets. Probate can also lead to disagreements among heirs over who manages the estate, who gets which asset, and who should be appointed as guardian to your minor children. The cost of these disagreements can mount, especially if your heirs hire their own attorneys. For this reason, one of the primary goals of estate planning is to limit or dispense entirely with the need for probate a proceeding.

Is a Will a good option to avoid probate?

A will is an inexpensive means of providing basic estate protection and limiting the need for probate. A will does three very important things: (i) it sets forth how your assets will be distributed to your beneficiaries upon your death, (ii) it identifies your executor (the individual who will manage your estate and make distributions to your named beneficiaries), and (iii) it identifies guardians for your minor children and pets. Unfortunately, a will does not guarantee that your heirs will not be tied up in probate proceedings. Where the value of the property transferred under your will exceeds a certain threshold –$150,000 in California— the estate must go through probate. For this reason, modern estate planning has come to rely on the use of revocable trusts to provide comprehensive and flexible estate protection as assets in revocable trust are not subject to probate. 

 

What is a trust and how does it protect my estate?

A trust is a legal arrangement whereby property is managed by a trustee for the benefit of beneficiaries. If you create a revocable trust you will be the trustee and the beneficiary of the trust during your lifetime. As the name implies, a revocable trust is revocable by the creator of the trust during their lifetime. Any assets you place in trust can be removed at any time. You can also amend the trust, change beneficiaries, or cancel the trust at any time. When you die the trust, much like a will, sets forth specific instructions for how your estate will be managed and distributed. Unlike a will, a trust provides the following benefits:

  • It doesn’t require probate. By transferring your largest assets to your trust (called “funding” the trust), you can ensure that your estate will avoid probate.

  • Your wishes remain private. A trust is a private document that is shared with few people. A Will, however, becomes a public document once it is submitted in a probate proceeding. Anyone can go down to the courthouse and get a copy.

  • Faster and less expensive estate distributions.

  • Establishing a trust and transferring your largest assets to it can be beneficial should you become incapacitated. Under the terms of your trust, the successor trustee would manage the trust assets for your benefit.

  • More flexible and customizable then a Will, and allows you create complex arrangements for the management and distribution of estate assets. This is particularly important in blended families, where one or both spouses have children from prior marriages.

 

How do I move property into trust?

Assets that do not have recorded ownership, such as your household items and most personal property can be transferred into your trust by listing the assets, either individually or by type, in the trust document itself. Assets with titles (recorded ownership), such as real property, bank accounts, and vehicles, require the additional step of being retitled. While it is a bit of work to retitle assets, it's worth it. Once your trust is funded, your assets can be easily distributed by the successor trustee upon your death without the need for expensive and lengthy probate proceedings. It is also far easier for you to identify your assets and transfer them while your living than it is for your friends or family to track down all the assets you own after your death, without your help. Note that not all assets need to be placed in your revocable trust in order for your estate to avoid probate. 

Does putting property into trust change the property from separate to community property or vice versa?

Moving property into the revocable trusts that we provide will not change the character of the property from community to separate or separate to community. If you fund the trust with your separate property it will remain separate, if you fund it with community property it will remain community property.

 

What documents make up an estate plan, and what do each of them do?

The backbone of our estate plans is a revocable trust. In the case of the individual estate plan it is an individual revocable trust, whereas a family estate plan utilizes a joint revocable trust. The revocable trust is where your wishes regarding the management and distribution of your estate is recorded. Your trust also appoints successor trustees –the individuals that manage your trust should you die or become incapacitated. Each estate plan also includes:

  • A pour over will that transfers assets not in your trust at the time of your death into your trust upon your death.

  • An advance health care directive for each spouse, which: (i) specifies your health care wishes should you become incapacitated, and (ii) appoints agents to effectuate those wishes on your behalf.

  • A durable power of attorney for financial decisions for each spouse.  Should you become incapacitated, the durable power of attorney allows your appointed agent to manage your finances for your benefit.