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FAQ - Estate Planning

What is an estate?

Your estate is simply everything you own, such as your home and other real estate, bank accounts, stocks and bonds, retirement benefits, insurance policies, and other personal belongings.

What is probate?

Probate is a court-supervised process of transferring property to beneficiaries.  To begin the probate process, someone will typically petition the court for authority to administer the estate.  If a Will exists, the court will determine its validity, appoint a personal representative to manage the estate, and set the bond amount.  During probate, the personal representative will be required to inventory the assets and pay debts, taxes and expenses relating to the administration of the estate.  These activities must be reported to the court before the personal representative will have authority to distribute the remaining estate to the beneficiaries.

What assets are exempt from probate?

Retirement accounts such as IRAs and 401Ks, insurance policies, assets held in trust, and assets jointly owned with a right of survivorship are all exempt from probate under California law.  In addition, smaller estates under $150,000 are exempt from probate.

Do I need a Will if all of my assets are exempt from probate?

It’s a good idea.  Even if everything that you own is exempt from probate, you may still acquire additional non-exempt assets during your lifetime.  A Will would ensure that your assets are distributed according to your wishes instead of under California’s intestate succession laws.

What happens if a loved one left more than one Will?

It’s not uncommon for people to have more than one Will when they die. They could have made changes to their Will over time or at some point created a completely new Will.  If you find yourself in a situation with multiple competing Wills, you must first determine which document is the controlling document.  Typically, each new Will should state that all previous Wills are revoked.  However, other issues may come into play, such as the decedent’s mental capacity when the Will was executed, any other potentially superseding documents (such as amendments and revocable and irrevocable Trusts), and the involvement of individuals who may have engaged in improper conduct such as forgery, fraud or asserting undue influence.

What is a Trust?

In short, a Trust is an entity that exists just as you and I exist.  Like any business, Trusts operate at the direction of people, capable of doing much the same things that people are capable of doing.  They can enter into contracts, purchase real estate, make investments, open bank accounts, and start businesses.  Often, Trusts are set up to inherit property.

An individual who creates and funds a Trust is called a settlor, grantor or trustor.  The person who operates and manages the Trust is called trustee.  Most of the time, a settlor is also a trustee.

Of course, there are certain rules that the trustee must play by and Trust documents typically spell these rules out in detail.  In addition, the law imposes a strict level of fiduciary responsibilities on trustees in order to ensure that they are managing assets properly.

The beneficiary is the person who enjoys or will enjoy the benefits of the Trust assets.  Trustees manage Trust assets for the beneficiaries.  

Will I lose control of my assets with a Living Trust?

No.  Establishing a Living Trust in no way affects your ability to manage or control your assets. You have complete control of your assets and can do anything with your assets after the Living Trust is created.

Can I just simply add another person to my accounts or hold property jointly to avoid probate?

Yes you can, but it’s usually an invitation for problems to arise.  The person you add may at the time or later have creditors or a spouse that may try to levy or claim an interest in those assets.  There may also be gift tax or tax basis issues that arise by simply putting another person on title to your assets.

Do I need a Will if I have a Trust?

Yes.  This is called a “pour over will,” which directs that that all of your assets not yet transferred into your Trust be divided according to your instructions in your Trust.

Will my property taxes be reassessed if I transfer real estate into the Trust?

No.  As long as you file the appropriate documents with the county assessor’s office, your property taxes will not be reassessed in California.

Does a Trust protect my assets from creditors?

While a Living Trust can provide privacy and avoid probate, it provides practically no protection from creditors.  However, there are a number of other planning tools that help to serve the “creditor protection” purpose.  For example, if you put assets in an Irrevocable Trust (one you don’t control and can’t revoke), then the money probably will no longer be considered yours, and consequently will not be within a creditor’s reach.

What is a Durable Power of Attorney?

This is an estate planning document where you name someone to make financial decisions on your behalf if for any reason you become incapacitated.  The named person can pay your bills, deposit your checks and make other financial decisions without the need of a formal conservatorship, which is usually a burdensome and expensive process overseen by the Court.

What is a Healthcare Directive?

This is an estate planning document where you name someone to make health care decisions on your behalf in the event you become incapacitated.  During the period of incapacity, the named person will make all health care decisions for you, with the assistance from your physician of course.  You can also designate whether or not you wish to continue life support in the event you are in an irreversible comatose state.



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