|
What happens to your Children if something happens to
you?
Actually, it's up to you, and you have two choices: a) Decide now who you
think should raise your children if you could not, and name them in your
Will as 'Guardian'; or b) If something happens to you, let a judge make
the decision for you.
Of course, the right decision is obvious, but many people
procrastinate here because they can't decide who the 'perfect' choice
would be. Just remember that a good choice by you—even if it's not
the 'perfect' choice—is going to be better than one made by someone
you've never met. Also keep in mind that it's something you can always
change.
Back To Top
What's the
point of a Living Trust?
The primary benefits of a Living Trust are that when it is used properly,
it avoids Probate, ensures that children do not inherit assets before
they are responsible enough to use their inheritances wisely, and can
double a married couple’s protection from Estate Taxes.
Back To Top
What is Probate?
Probate is when you go to court to have property ownership transferred
out of a deceased person's name, and into the names of the people who are
going to inherit the property. This is a necessary process for anyone who
has not done proper estate planning. Assistance of an experienced Probate
Attorney is highly recommended for Probates to help navigate through the
maze of courts, legal documents, accountings, and financial institutions
that are part of every Probate.
Because of the timelines set by California
law, Probate in California
takes a minimum of 7 to 8 months, and averages 12 to 18 months to
complete. Fees for the attorney
and executor are set by California
law and are paid from the assets in the Probate Estate (and not by the
beneficiaries).
Back To Top
Don't I Avoid Probate if I have a Will?
No. This is a very common misconception. Think of a Will as your ticket
to Probate.
Back To Top
Don't I Avoid Probate if I have a Trust?
Yes, but only for property you transfer into your Trust. But be very cautious
here. Make sure you get professional help with this because you will need
to know the correct language for the transfers, which assets
should/should not be transferred into your Trust and the different
methods for transferring different assets into your Trust. Not
transferring assets into your Trust or transferring assets incorrectly
can be worse than having no Trust at all.
Back To Top
What are the 4 Legal Documents Every Parent Should
Know About?
The 4 Legal Documents are a Will, Living
Trust, Advance Health Care Directive, and Durable Power of Attorney for Finances. Click each of these
documents to see more information about them in the FAQs on this page, or
visit the Estate
Planning page for a brief description of each of these documents and
how they fit into a basic Estate Planning Package.
Back To Top
What is included in a Complete Estate Plan?
A basic Estate Plan generally includes Will(s), Living Trust(s), Advance
Health Care Directive(s), Durable Power(s) of Attorney for Finances and
where appropriate a Community Property Agreement and/or other tax saving
documents like Life Insurance Trusts (ILITs). Also included should be
instructions for transferring assets into your Trust, a binder with tabs
for each document (Living Trust, Will, etc.), and a place in the binder
to write down where your safe deposit box is, where the key is, list bank
accounts, life insurance policies, financial advisors names and phone
numbers, etc. For more information on a Living Trust Package, go to the Estate Planning
page.
Back To Top
What is a Will?
A Will is a very useful document that allows you to: nominate someone to
raise your children after your death, say who gets your property after
your death, and appoint a 'Personal Representative' or 'Executor' who
will appear before the Probate Court, gather your property, pay your
debts and taxes, and distribute your property per your instructions.
The problem with only having a Will is that it is your ticket to
Probate. If you have a Living Trust and have properly transferred your
assets into it, you will avoid Probate. Note that if you have a Trust,
you still need what's called a 'Pour-over Will' to nominate a Guardian
for your children and to cover any assets that were inadvertently not
transferred into your Trust.
Back To Top
What is a Durable Power of Attorney for Finances?
This is a really useful document if you become disabled because it can
allow someone you choose to handle your financial affairs that are not
part of your Living Trust, such as cashing checks made out to you,
handling your retirement accounts, filing your tax returns, accessing
your safe deposit box, selling a house to generate funds for your
family's support, planning to avoid death taxes, etc. Without this
document, the person caring for you would have to spend quite a bit of
their time (and your money) setting up what is called a 'Conservatorship'
and getting a judge's approval before acting on your behalf.
Back To Top
What is an Advance Health Care Directive?
You may have heard of a 'Living Will' or a 'Durable Power of Attorney for
Health Care,' which were earlier versions of this document. In a Health
Care Directive you decide in advance such things as whether you'd like to
donate any of your organs, if you'd prefer cremation or burial, who you'd
like to be in charge of carrying out your wishes, and if it came down to
it, if you'd prefer to remain on life support or not.
Back To Top
What is a “Trust Certificate” or
“Certification of Trust”?
A Trust Certificate or Certification of Trust, (also called a
“Trust Cert” for short), is a short summary of basic
information about your Trust, like the Trust’s name and date, who
the Trustees are, etc. It can be
used to allow financial institutions to do business with the Trustees of
your Trust without the need for the financial institutions to make a copy
of your entire Trust document.
Back To Top
What is Estate Planning?
In the simplest terms, Estate Planning is:
a) Putting in writing the names of the people you would want to take care
of your children, your finances and your health care if you couldn't do
so anymore (and telling them what you would want them to do); and
b) Using the appropriate legal documents so that in case of death or
complete disability, the money you've worked so hard for stays in your
family, instead of being wasted on excessive Probate Fees or Death Taxes.
Back To Top
Should I buy a 'Cheapy' Trust from the Newspaper or
the Internet?
This is generally not a good idea. Like most things in life, you usually
get what you pay for, and Estate Planning is no exception. Most of the
problems with Living Trusts are caused by Trusts that are badly written,
do not come with the other documents you need, or do not come with proper
instructions for transferring assets into them. It's very important that
you meet personally with the attorney who will draft your documents, so
you can decide for yourself if he or she is competent and so you can be
sure that you will have all of the documents that are necessary to meet
your specific needs and goals. Where death taxes are concerned, mistakes
can cost your family thousands of dollars. It's simply not worth the
risk.
Back To Top
My friend is a lawyer but does not usually do
Probate, Wills or Trusts. Should I have him/her draft a Will for me or
handle my Probate?
Think of it this way: would you go to a dermatologist to have open
heart surgery? Probate and Estate Planning are specialized areas that
require knowledge of not only Wills and Trusts, but also the Probate
Court, (which is its own separate court with its own set of rules called
the Probate Code), as well as a variety of taxes (i.e., Estate Tax, Gift
Tax, Generation-skipping Tax, Income Tax of Trusts and Estates, and
Property Tax), Property issues, (e.g., Real Estate, Personal Property,
Community v. Separate Property), Retirement benefits, etc. Most attorneys
are familiar with some of these legal issues, but only Probate and Estate
Planning Attorneys who work with them daily are skilled in all of them.
Back To Top
Why isn't Joint Tenancy enough?
Joint Tenancy avoids Probate on the first death of a married couple, but does
not avoid Probate on the second death or on a simultaneous death. After a
first death, using Joint Tenancy with your children can lead to unwanted
results such as having to split the value of your house with your child's
ex-spouse on your child's divorce, having to sell your house to pay your
child's creditors after a car accident, or your child ending up with gift
tax problems when he/she gives part of the house to his/her siblings
after your death.
Back To Top
|
