What is Estate Planning?
Estate planning is a process that addresses:
- How your assets are managed during your lifetime;
- Your future needs in the event that you are unable to care for yourself; and
- How and to whom your assets are distributed after your death.
Did you know that you already have an Estate Plan? Is the default Estate Plan the best plan for you and your family?
If you have no written documents in place, then upon your death, your estate will be distributed to your intestate heirs.
How and to whom your estate is distributed depends on your marital status and whether you are survived by any children, grandchildren, parents, siblings or other relatives.
What is Probate?
Probate is a court-supervised process in which your assets are identified, appraised, and distributed in accordance with the provisions of your will, or by intestate succession if you die without a will. Probate is a public, costly and lengthy process.
The probate court will oversee the administration of your estate, and may also take the following actions:
- Supervising the actions of the personal representative, including payment of state and federal taxes
- Deciding which property is subject to estate administration
- Determining your true heirs
- Hearing any contested claims by creditors or others seeking to collect payment from the estate
- Supervising the transfer of assets to beneficiaries named in your will
- Appoint a guardian and overseeing the guardian’s use of the property placed in trust for the benefit of children or dependents
- Overseeing the distribution of the assets of the estate
In addition to being a public process, a probate administration may be very costly to the estate. Under California law, the personal representative and attorney representing the estate is entitled to a statutory fee for ordinary services. Probate Code §10810(a). Ordinary services include, but are not limited to, the filing the petition for probate, identifying assets, collecting assets, notifying beneficiaries of the decedent’s death, obtaining an appraisal of the decedent’s assets and notifying creditors. The statutory fee does not include extraordinary fees for services relating to the sale of an estate asset or the filing of the decedent’s estate tax return.
Click here for more information about the probate statutory fee.
How Can You Avoid Probate?
The publicity and costly disadvantages of a probate administration can be best avoided by the use of a Revocable Trust (described below). You may also avoid probate if the value of your estate at your death does not exceed $150,000.00. Summary procedures may be available if the estate meets certain provisions. Please contact our firm for more information.
A GOOD Estate Plan has, at a minimum,
- Revocable Trust
- Will
- Advance Health Care Directive
- Durable Power of Attorney
- HIPAA Authorization
What is a Revocable Trust?
A Trust is a legal method of holding and managing assets solely for the benefit of a trust beneficiary during your lifetime and transferred to your beneficiaries when you die. A Trust is created when the owner of a property (called the grantor, trust or settlor) transfers property to a person or institution (called the trustee) who holds legal title to the property and manages it for the benefit of a third party (called the beneficiary). One person can wear all three “hats”, i.e., you can be the grantor, trustee and beneficiary of the trust. The trust instrument is a written document that states the identities of the grantor, trustee and beneficiaries and sets forth the terms of the trust, i.e., how the trust property should be managed and distributed.
By utilizing a trust, upon your death, your assets held in trust will not be subject to estate administration by the probate court. This means that your survivors are not required to disclose to the public the details of your possessions and debts. Your estate avoids probate because your trustee is the legal owner of the trust assets and is legally obligated to carry out the terms of your trust in accordance with the trust provisions.
In addition to avoiding probate, a trust can be structured to take advantage of the estate tax applicable exclusion amount, which is currently $11.2 million per person. Note that the applicable exclusion amount reverts back to the pre-2018 amount ($5.6 million, adjusted for inflation) on January 1, 2026.
There are many complexities with the use of a trust. We recommend that you contact our office for more information on what kind of trust, if necessary, is the right one for you and your family.
What is a Will?
A will is a legal document that states how your assets will be distributed, i.e., provides for who will get what asset, the person(s) nominated as an Executor(s) of your estate, and if you have minor child(ren), the person(s) nominated as the Guardian(s) of the person and/or estate of your minor child(ren). There are three (3) types of wills: holographic (handwritten), statutory (fill-in-the blank) and a third-party prepared document (usually prepared by an attorney). A will that is generally prepared and executed contemporaneously with your Revocable Trust is called a “Pour-Over Will”. Please contact our office for information about these types of wills or if you wish to download a California Statutory Will.
What is a Power of Attorney?
A Power of Attorney is a written document in which you appoint an “Attorney-in-Fact” to act for you in the event of your incapacity. You can give your Attorney-in-Fact broad or limited powers. Such powers can also be immediate or springing. Contact us if you wish to download a Uniform Statutory Form Power of Attorney.
What is a Health Directive?
A Health Directive, called an Advance Health Care Directive in California, is a written document in which you appoint a representative to make health care decisions for you in the event of your incapacity. Such instructions may provide for: life-sustaining treatment, pain management, organ donation, disposition of remains or funeral arrangements. Contact us to download an Advance Health Care Directive form.