Your family is your priority.

Carefully planning your estate is an important part of ensuring your family is provided for after your death. In California your assets do not automatically go to your children/heirs after you die. Without estate planning documents in place your estate could be held up for years in court proceedings called Probate. Probate could cost thousands of dollars without the proper trust document in place. Your family could be left with little or no money to live on after you pass.

There is a protocol for creating valid wills and trusts, and it’s important to follow certain formatting and guidelines so that the documents are official and hold up to the state’s standards. Sound estate planning usually necessitates good legal counsel.

When is Probate necessary?

Probate is necessary when your assets exceed $150,000.00. Without the proper estate planning documents in place your estate will go through legal proceedings called Probate. As discussed this could take years and cost thousands of dollars.

The cost of probating an estate is based on the gross asset value. This generally is all that own but nothing that you owe. Your debts are not taken into consideration. If your home is worth $700,000 but you owe $500,000 in mortgage the gross asset value is $700,000.

The compensation that your personal representative and attorneys can request by California law is relative to the estate’s gross asset value. Those fees do not include special fees for selling assets, filing fees, tax preparation and litigation. Below is an example of some of the compensation to attorney and personal representative without proper estate planning documents that are allowed in Probate proceedings

*This is not a tax. Maximum fees authorized by the California Probate Code which does not include any special fees.

Avoid Court allow our firm to draft a Living Trust. It is one way to ensure the funds you leave your loved ones are managed carefully and as per your specifications. If you fail to properly designate an heir the State of California will make that decision for you.

Trusts

Trusts are one way to protect your assets from probate, as well as certain taxes. It is also a way to ensure the funds you leave your loved ones are managed carefully and as per your specifications. If you fail to properly designate an heir the State of California will make that decision for you. If you failed to make plans for your minor children a Judge of the Superior Court will make the decision for you. Is that what you really want?

• Living trust
• Revocable trust
• Irrevocable trust
• Testamentary trust
• Bypass trust (also referred to as married A-B trusts)
• Tax-exempt trust, e.g., qualified terminable interest property trust (Q-TIP trust)
• Pet trust
• Personal residence trust

What is the value of a Living Trust?

A Living Trust manages your assets and wishes when you become incapacity or upon your death. It names a successor trustee who will manage your assets when you are unable to do so.

Usually you are the original trustee who performs the duties delegated under the trust. You can name someone else as trustee if you wish. Upon your death the trustee will pay any debts, prepare tax returns if necessary and distribute your assets according to your instructions under the Living Trust. All this is accomplished without court supervision. Without a Living Trust then all your assets will be distributed through the Probate Court without any thought to your original desires. Probate Court is necessary when the gross asset value is over $150,000.00. This amount takes into consideration the value of your assets not what you owe.

What do I do after my trust is prepared?

A trust needs to be funded after execution. Your assets must be transferred into your living trust. This avoids the court from appointing a conservator of its own you assets must be transferred to the trustee of the living trust.

If you own real estate in another State an attorney in that state will help you prepare the deed and complete the transfer. If the property is in California then a California attorney may assist.

You may wish to consider changing the beneficiary on your life insurance and 401(k) plans. A Certified Public Accountant can answer questions regarding the tax consequences of the transfer.

Do I need to file a separate tax return for my living trust?

During your lifetime you will not be required to file a separate tax return. Your social security number is your tax identification number. All deductions and income will be reported on your individual tax return.

Are there additional estate planning documents I should have?

If you become incapacitated a durable power of attorney would be beneficial. The agent named on the document would be empowered to make decisions for you should you become unable to do so. Your agent would be able to manage your financial affairs, sign tax returns, and make payments to creditors on your behalf from your estate. The durable power of attorney only takes effect if you are incapacitated. It ends when you die. The agent cannot make any decisions regarding your estate once you die. The trustee of your Living Trust will make those decisions at that time as reflected in your Living Trust.

You should also consider an advance health care directive/durable power of attorney for health care. This allows your attorney-in-fact to make healthcare decisions for you. The attorney-in-fact will make decisions associated with medical treatment. The durable power of attorney expires when you die. An advance health care directive would state your wishes as to life support, organ donation and funeral arrangements. Decisions such as these can be daunting on a loved one. Do not leave those decisions to your family.

What happens if I become incapacitated?

Your successor trustee will take over the management of your Living Trust. Assets that are not in the Living Trust will be managed by someone else. Those assets could be managed by your significant other. It is recommended that you have a durable financial power of attorney.

Community property assets are those assets acquired while married or in a registered domestic partnership. Earned income is not treated as community property for income tax purposes in domestic partnerships.

Without estate planning documents in place when you become incapacitated your financial matters would be subject to Probate Proceedings. A conservatorship would be established. If a Judge found that you were unable to manage your own affairs the court would appoint a conservator to manage your assets for you. The conservator is required to report back to the court on a regular basis. The conservator could be your spouse, another family member or a public guardian.

The Conservatorship process can be costly because of court intervention. The conservatorship proceedings are less flexible when it comes to managing your real estate or other interests. A Living Trust allows you the flexibility to name a successor trustee, someone you know to take care of those assets while you are incapacitated.

Upon my death why is a Living Trust helpful?

The trustee of your Living Trust will manage your assets held in the trust. This saves your heirs time and money. Remember without a Living Trust your assets could be held up in Probate Court for months and even in some cases years. Not to mention the expense. Your heirs who could use the money after your death will not have access to those assets.

A Living Trust is not public information. If your assets are not held in a Living Trust their value will be public knowledge while they go through Probate Court to be distributed. The identities of your heirs are also public knowledge in Probate proceedings. This information remains private when the assets are held in a Living Trust.

What happens in Probate Proceedings?

The executor of your will file a petition with the probate court. A hearing will be held. Your Will is admitted into probate. At that time an executor is appointed. The executor will make an inventory of your assets which will then be filed with the court. The court will give notice to your creditors to file claims. The court will make the final distribution of your assets. Without a Living Trust you have no say in the distribution of your assets.

Should everyone have a Living Trust?

If your assets are under $150,000 then a Living Trust may not be necessary. However, a durable power of attorney; healthcare directive and durable power of attorney for health care would be recommended without a Living Trust.

The more assets one has the greater value the Living Trust is to those individuals. A Living Trust is important in the event of illness or injury. It can simplify life decisions for your heirs at times of your incapacity or death. At of time increase stress and hardship there is no need to make things more difficult for your family. Let a Living Trust give you peace of minds.

There are various types of trusts, and the one that’s appropriate for you depends on your estate, the functionality you desire, and your goals.

Below are a few examples of trusts that are available:

The Law Offices of Norman J. Homen Can Help Plan Your Estate

By preparing the proper estate planning documents you can avoid Probate and save your family probate fees. The money should go to your family and loved ones not the Court.

Call the Law Offices of Norman J. Homen to schedule a free consultation: (866) 383-4529. Offices in El Monte and Garden Grove to serve you.

Our office speaks: Chinese, Vietnamese, Spanish and English