Navigating the waters of establishing and executing a trust or will can be daunting at first but rest assured with legal counsel and advance preparation you'll have peace of mind in knowing that your wishes will be legally binding when the time comes.
A trust is a legal arrangement through which a person designates assets to be handled in a certain manner, usually by themselves at first, but once the person passes away, then by a trusted relative. Attorneys have used trusts to avoid costly probate proceedings at death, to take advantage of tax rules and reduce estate tax payments, to provide benefits to an individual without compromising public benefits, and simply as an efficient estate planning device.
A Revocable Living Trust may include the following:
>> Individual or Joint Revocable Living Trust
>> One Pour-Over Will (per person)
>> Certification of Trust
>> Assignment of Interests/Asset Schedules
>> Quitclaim Deed & Recording for One Real Property
>> Power of Attorney(s) for Health Care/Advance Health Care Directive(s)
>> HIPAA/CMIA Waiver(s)
>> Power of Attorney(s) for Asset Management
>> PLUS! Community Property Declaration for Couples (if needed)
Certain trusts can also result in tax advantages both for the donor and the beneficiary. Other trusts may be used to protect property from creditors. Unlike wills, trusts are private documents and only those individuals with a direct interest in the trust need to know of trust assets and distribution. Provided they are well-drafted, another advantage of trusts is their continuing effectiveness even if the donor dies or becomes incapacitated. This can potentially eliminate the need to file for conservatorship over the donor.
The best-known advantage is avoiding probate. Probate is costly in California; the attorney’s fees alone of a half-million dollar estate (gross value) can be upwards of $15,000.00 and take a year, or longer. A trust, while more complex to create than a Will, can avoid the probate process entirely for much, much cheaper. Trusts are an effective estate planning tool.
The primary purpose of a will is to identify the persons or entities that you want to receive your property when you pass away. A will can also be used to nominate the person(s) you want to be responsible for the care of your minor children. Finally, a will can nominate an executor who will administer your will through the probate process.
Generally, a Simple Will may include the following:
>> One Last Will & Testament
>> Durable Power of Attorney
>> Health Care Power of Attorney
>> HIPPA Authorization
Certain assets, such as those held in "joint tenancy" with "right of survivorship", may not be disposed of under a will. Such assets, when you pass, automatically go to the other joint tenant(s) who survives you, regardless of whether your will states otherwise. Such joint tenancy interests can include, for example, a house or bank accounts. If your home is owned by you and your spouse as joint tenants, then your spouse automatically receives full title upon your passing. If one of your bank accounts is owned jointly, then the other joint owner(s) automatically receives the entire account balance upon your death. Similarly, a life insurance policy will pay the death benefit to the named beneficiary, regardless of whether your will states otherwise. The same is true of IRAs or other accounts in which you have named a beneficiary.
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Estate planning services are assessed on a flat fee basis as much as possible. Clients who have multiple beneficiaries, complex assets, and/or complex trust and will provisions may require additional planning and costs. Additional fees will be assessed and communicated in advance. Please contact us if you have any questions.