FAQs
Common Questions + Helpful Answers
Estate Planning is the process of appointing someone to manage or transfer what you have, to who you want, when you want, the way you want while avoiding unnecessary taxes, legal fees, and most importantly all while keeping everything out of the public court system.
You have an “estate” if you have any assets, and you need to plan not only for yourself, but for the future of your family. Any of the following criteria could deem you eligible and in need of a personalized Estate Plan:
You are an adult (18 years or older)
You have children
You own any assets: home(s) vehicle(s), cash, investments, life insurance, etc.
If you are like most people, your family is the utmost important thing in your life. There is a sense of comfort in knowing you have taken the time to ensure their safety and welfare as best you possibly can. After all, who spends years working and acquiring assets only to be distributed according to how a judge deems fit?
A formal Estate Plan consists of the following elements:
A Will: this identifies who you want to receive each one of your assets, who is to be your children’s guardian (if applicable) and who is to be an executor to oversee the estate plan process.
A Durable Power of Attorney: this is someone who will make financial decisions if you’re unable to, such as paying your bills, managing investments and making legal and/or business decisions.
A Medical Power of Attorney: this is someone who will make medical decisions on your behalf if you are unable to.
A Living Will: this documents your end of life preferences.
A Trust: this will control how and when your assets are distributed and reduces or eliminates estate taxes.
The Probate Court will decide who is going to administer your estate and who will become guardian of your minor children. The California Probate Code will dictate who gets your money and your belongings. The following problems could arise without a will in place:
An inappropriate person could be appointed by the court to administer your estate
An inappropriate guardian may be appointed by the court
Children may receive their share when they become “adults”, at the age of 18
The beneficiaries may not be those you would have selected had you completed an estate plan
In a nutshell, probate means to prove that the will was the decedent’s and is being offered to the court as the “Last Will” of the decedent. Probate is essentially the entire process of administration of the decedent’s will, including the gathering of the decedent’s assets, paying the decedent’s taxes and debts and distribution of any remaining assets to the proper beneficiaries.
Although going into probate saves you money while you are alive by not paying to draft a trust, there are several potential downsides including:
Probate can last anywhere from 1-2 years, sometimes longer
An executor/attorney will be paid according to the gross value of each estate
Your estate will lose any privilege of privacy as probate is a public process
California Probate Code Section 10810 sets the maximum statutory fees that attorneys can charge for a probate. The court could order higher fees for more complex cases. The fees are 4% of the first $100,000 of the estate, 3% of the next $100,000, 2% of the next $800,000, 1% of the next 9,000,000 and 0.5% of the next $15,000,000. For estates that exceed $25,000,000, the court will use its discretion to determine the fee for the amount that is greater than $25,000,000. In addition, there are statutory fees used to compensate attorneys and executors in probate cases that range from and range from $6,000-$33,000 for estates from $150,000-$2,000,000, and if both the attorney and the executor receive a fee (this is a common occurrence), the amount paid will be double.
An estate is appraised by a probate referee who determines the fair market value of the assets. The fair market value does not deduct for mortgages or other debt, which can result in an appraisal for the property that is higher than the equity that the deceased person owned in the property. Probate referees are appointed by the state controller’s office and they receive a fee based on 0.1% of the assets appraised. Keep in mind, in addition to these statutory fees, there are costs for court filing fees, appraisal fees, publication costs and other miscellaneous fees charged by the county.
This is a legal document that provides instructions to a probate court as to how you would like your assets distributed upon your death. With you Last Will & Testament, you nominate a Personal Representative (also known as an Executor) of your estate, who will be in charge of taking care of the entire probate process. The Executor, along with a probate attorney, will inventory your probate assets, settle outstanding debts and make any property distributions. Your Last Will & Testament plays another crucial role; it nominates a guardian for your minor children in the event you (and your spouse) become incapacitated or pass away.
This is a legal document which instructs the probate court to transfer any remaining probate assets directly into your previously established Revocable Living Trust in the event of your death. Similar to a Last Will & Testatment, a Pour Over Will appoints an Executor of your estate, who takes care of the entire probate process and makes sure that any valid outstanding debts are settled accordingly. A Pour Over Will is also a proper legal document to name a guardian for your minor children.
This is a legal entity that is created to hold ownership of an individual’s property and assets. Below are some things that a Revocable Living Trust (RLT) can do:
Bypass Probate - Property in a RLT does not pass through probate. Property that passes using a will guarantees the probate process; a costly and time consuming process which can take years to resolve
Avoid Conservatorship and Guardian Proceedings - a RLT allows you to authorize your partner, spouse, child or another trusted individual to manage your assets should you become incapacitated and unable to manage your own affairs. Will only become effective when you die, so they are useless in avoiding conservatorship and guardianship proceedings during your life.
Maintain Privacy After Death - Unlike wills, trust are not public documents. Anyone, including nosey neighbors, unscrupulous “charities” and predators can discover the details of your estate if you have a will. A RLT allows you to maintain your family’s privacy after death.
Provide Asset Protection - Trusts are crafted to include protective sub-trusts which allow your beneficiaries access but keep the assets from being seized by their creditors, such as litigant, bankruptcy trustees or divorcing spouses.
Yes, for two very important reasons: as a safety net to “pour” assets into your Trust in case you have forgotten to put an asset into it, and to provide for the care of your minor children and other dependents.
An executor is the individual responsible to collect and protect decedent's assets, pay the death taxes, debts, outstanding expenses and make appropriate distributions if there are any remaining assets.
This is a legal document that gives your named agent the authority to pay bills, manage investments, file tax returns, mortgage and sell real estate, make financial decisions and address other financial matters on your behalf. You can give your agent the authority to make financial decisions for you immediately (upon signing the DPA) or in the event you are determined incapacitated by a licensed physician. Either way, the powers that are delegated to your agent do not terminate upon you becoming disabled or incapacitated.
A Medical Power of Attorney, also known as an Advanced Health Care Directive enables an individual (the principal) to designate another person as his/her “attorney-in-fact”, one who acts on the principal's behalf regarding health care decisions.
