Frequently Asked Questions
1. What is estate planning?
Estate planning is a process. It involves people such as your family, other individuals and, in a lot of times charitable organizations of your choice. It also involves your assets and the various forms of ownership and title that those assets may take. It will also address your future needs in case you ever become unable to care for yourself.
Through estate planning, you can determine:
2. What is involved in estate planning?
Estate planning is a process. It involves people such as your family, other individuals and, in a lot of times charitable organizations of your choice. It also involves your assets and the various forms of ownership and title that those assets may take. It will also address your future needs in case you ever become unable to care for yourself.
Through estate planning, you can determine:
- How and by whom your assets will be managed for your benefit during your lifetime if you ever become unable to manage them yourself.
- When and under what circumstances it makes sense to distribute your assets during your lifetime.
- How and to whom your assets will be distributed after your death.
- How and by whom your personal care will be managed and how health care decisions will be made during your lifetime if you become unable to care for yourself.
2. What is involved in estate planning?
CONTACT US
1871 The Alameda, Suite 475
San Jose, CA 95126
Phone: (408) 553-0801
Fax: (408) 553-0807
contact@lonichandpatton.com
1871 The Alameda, Suite 475
San Jose, CA 95126
Phone: (408) 553-0801
Fax: (408) 553-0807
contact@lonichandpatton.com
There are many issues to consider in creating an estate plan. To begin with you should, ask yourself the following questions:
3. What Is a Will?
A will is a legal document that gives certain instructions to be carried out after death. These instructions include things like distribution of assets, and choice of guardians for your children. Once you pass a will is irrevocable. In your will, you can name:
4. Does a Will Cover Everything I Own?
No. In most cases your will affects only those assets that are in your name at your death. Assets that are not affected by your will include:
5. What Happens If I Don't Have a Will?
If you die without a will, California law will determine the beneficiaries of your estate. This does not mean that the state automatically inherits all of your belongings. If you are married or have established a registered domestic partnership, your spouse will receive all of your community property assets. Your spouse will also receive part of your separate property assets. The rest of your separate property assets will be distributed to your children or grandchildren, parents, sisters, brothers, nieces, nephews or other close relatives.
If you are not married then your assets will be distributed to your children or grandchildren. If you have any other relatives such as nieces, nephews, brother, sisters, among others then your property will be distributed to them as well. If your spouse dies before you, then their relatives may also be entitled to some or all of your estate. Any friends or charities you contribute to will receive nothing if you die without a will. The State of California is the beneficiary of your estate if you die and you have no living relatives.
6. What If My Assets Pass To a Trust After My Death?
You can make plans in your will for all your assets to be distributed to a trust upon your death. This would be called a testamentary trust. With the correct designation, testamentary trusts can even be beneficiaries of life insurance policies and other retirement plans.
If you have a living trust then your will is commonly referred to as a pour over will. This type of will has instructions to transfer all your remaining assets to your living trust at the time of your death.
For relatively small gifts to beneficiaries who are minors, you might think about providing for transfers from your estate to a custodian under the California Uniform Transfers to Minors Act.
7. Can I Change or Revoke My Will?
Yes. You should make sure your will is always up to date and check it periodically because if something were to happen then your property may not be as distributed as you would have hoped.
Your will can be changed through a codicil, which is a legal document that must be drafted and executed with the same procedure that applies to wills. A codicil is an amendment to your will. You should not change your will by simply crossing out words or sentences, or by making any notes or written corrections on it.
Another option would be to establish a new will or revoke an old one. If you get married or divorced then you should seek advice from a lawyer to make a new will. Another suggestion would be to review your will if there are any major happenings within your family such as births or deaths, when your assets fluctuate, or when it is no longer appropriate for your proposed guardian or executor or testamentary trustee to act in that capacity.
California will honor the validity of a will valid under the law of the state you moved from. It is recommended that a will be looked over by a qualified California lawyer, however, since California will govern the probate of your will should you live here at your death. On the other side, if you move out of California with a will from here, then it should be reviewed by a lawyer in that state.
8. What Other Planning Should I Do?
9. What is a living trust?
This is a legal document that partially substitutes for a will. With this living trust your assets are administered for your benefit during your lifetime then transferred to your beneficiaries upon your death.
Most of the time people name themselves the trustee to their trust, giving them complete control over the assets put into the trust over their lifetime. You also have the option fo naming a successor trustee who will manage the assets within the trust if you should ever become unable or unwilling to do so yourself.
The living trust talked about in this FAQ refers to a revocable living trust. This trust can be amended or revoked at any time by the one or ones who created it as long as that person or people are still competent.
Your living trust agreement:
10. What is a revocable living trust?
It is a legal document that can, in some cases, partially substitute for a will. With a revocable living trust your assets are put into the trust, administered for your benefit during your lifetime and transferred to your beneficiaries when you die. This is all without the need for court involvement.
Most people name themselves as the trustee in charge of managing their living trust’s assets. By naming yourself as trustee, you can remain in control of the assets during your lifetime. In addition, you can revoke or change any terms of the trust at any time as long as you are still competent.
In your trust agreement, you will also name a successor trustee who will take over as the trustee and manage the trust’s assets if you should ever become unable to do so. Your successor trustee would also take over the management and distribution of your assets when you die.
A living trust does not, however, remove all need for a will. Generally, you would still need a will, usually known as a pour over will, to cover any assets that have not been transferred to the trust.
11. Who should be the trustee of my living trust?
A lot of people choose to be the trustee to their own trust but others choose to get help from somewhere or someone else. This could stem from many reasons like inexperience to a lack of time.
Choosing the right trustee is very important. This person will act on your behalf with considerable authority and minimal if any court supervision. You can name co-trustees if you choose.
Discuss your choice with an estate planning lawyer. There are many issues to consider. For example, what conflicts of interest would be created if you name a spouse, child, business associate, or partner as your trustee? Or will the person named as your trustee have the time, organizational ability and/or the experience required to do the job effectively? These among others are important to consider.
12. How are my assets put into the living trust?
An important task still remains once your trust has been signed. In order to avoid court-supervised conservatorship proceedings if you should become incapacitated, or the probate process at your death, your assets must be transferred to the trustee of your living trust. This is a process known as funding the trust.
Other important tasks are that deeds to your real estate must be prepared and recorded. Bank accounts and stock and bond accounts or certificates must be transferred too. These things aren’t expensive but do require some paperwork.
A living trust can hold both separate and community property. This makes it quite convenient for spouses to plan for the management and ultimate distribution of their assets in just one document.
If you own real estate in another state, you may (depending on that state's law) transfer that asset to your trust as well to avoid probate in the other state. A lawyer from that state can help you prepare the deed and complete the transfer. If the real estate is located in California, a California lawyer should prepare the deed and advise you on transferring such property.
A lawyer can help you transfer other assets as well. For example, you should consider changing the beneficiary designations on life insurance to the trust. As for the beneficiary designations on a qualified plan, you should seek a qualified professional's advice because there are serious income tax issues.
13. If I have a living trust, do I still need a will?
Yes. Your will affects any assets that are titled in your name at your death and are not in your living trust. If you have a living trust, your will would most likely contain a pour over provision. Such a provision will simply state that all such assets should be transferred to the trustee of your living trust after your death.
Your will can nominate guardians for your minor children as well. Any and all assets held in a trust for your children would still be managed by the trustee.
14. What other estate planning documents should I have?
A durable power of attorney for property management could be helpful if you ever become incapacitated. This deals with assets that were not transferred to your living trust before you became incapacitated and any other assets that you receive afterward. With this power of attorney, you appoint another person to make financial decisions on your behalf.
This power of attorney, however, cannot replace a living trust because, among other things, it expires when you die. It also cannot provide instructions for the distribution of your assets after your death.
You could also consider setting up an advance health care directive / durable power of attorney for health care. This allows a chosen individual to make health care decisions for you when you can no longer make them for yourself. In your advance health care directive, you may state your wishes regarding life-sustaining treatment, organ donation and funeral arrangements. A health care directive can also allow an authorized agent to access your medical information. This might be important in light of more strengthened federal privacy laws.
15. What other kinds of trusts are there?
There are two other types of trusts:
16. Are there other ways of leaving property?
Yes. Certain kinds of assets are transferred directly to the named beneficiaries. These assets include:
17. What is probate?
Probate is a court-supervised process for transferring a deceased person’s assets to the beneficiaries listed in his or her will.
Typically, the executor named in your will would start the process after your death by filing a petition in court and seeking appointment. Your executor would then take charge of your assets, pay your debts and, after receiving court approval, distribute the rest of your estate to your beneficiaries. If you were to die intestate (that is, without a will), a relative or other interested person could start the process.
In such an instance, the court would appoint an administrator to handle your estate. Personal representative is another term used to describe the administrator or executor appointed to handle an estate.
Simpler procedures are available for transferring property to a spouse or for handling estates in which the total assets amount to less than $100,000. The probate process has advantages and disadvantages.
The probate court is accustomed to resolving disputes about the distribution of assets fairly quickly through a process with defined rules. Also, the probate court reviews the personal representative’s handling of each estate, which could help protect the beneficiaries’ interests.
One disadvantage is that probates are public. Your estate plan and the value of your assets will become a public record. Because lawyer’s fees and executor’s commissions are based on a statutory fee schedule, a probate may cost more than the management and distribution of a comparable estate under a living trust.
Time is also a potential factor. A probate proceeding generally takes longer than the administration of a living trust.
Courtesy of the California State Bar
Calbar.ca.gov
- What are my assets and what is their approximate value?
- Whom do I want to receive those assets and when?
- Who should manage those assets if I cannot, either during my lifetime or after my death?
- Who should be responsible for taking care of my minor children if I become unable to care for them myself?
- Who should make decisions on my behalf concerning my care and welfare if I become unable to care for myself?
- What do I want done with my remains after I die and where would I want them buried, scattered or otherwise laid to rest?
3. What Is a Will?
A will is a legal document that gives certain instructions to be carried out after death. These instructions include things like distribution of assets, and choice of guardians for your children. Once you pass a will is irrevocable. In your will, you can name:
- Your beneficiaries. This is your chance to distribute your assets to whomever you choose according to the instructions you leave in your will.
- A guardian for your minor children. You may nominate someone to be responsible for your children that are under 18. You may also name a guardian to be in charge of managing assets that have been directed to the child until that child is 18.
- An executor. You may nominate a person or institution to collect and manage your assets, pay any debts, expenses and taxes that might be due. After this has been taken care of, with the courts approval, they would distribute your assets to the beneficiaries according to the will you left. This is an important role that should be chosen wisely.
4. Does a Will Cover Everything I Own?
No. In most cases your will affects only those assets that are in your name at your death. Assets that are not affected by your will include:
- Life insurance. The beneficiary that is designated on the policy in the form that would have been filed with the insurance company itself, ignoring whoever your beneficiaries might be in your will.
- Retirement plans. Assets that are held in retirement plans, such as a 401(k) or an IRA, are forwarded to whomever you have named as beneficiary in the plan documents. Again, this will ignore whoever your beneficiaries might be in your will.
- Assets owned as a joint tenant with right of survivorship. Assets such as automobiles, stock accounts, bank accounts and real estate that are held in joint tenancy with right of survivorship will pass to the surviving joint tenant upon your passing, and not in accordance with any directions in your will.
- "Transfer on death" or "pay on death." Certain securities and brokerage accounts have a designation of one or more beneficiaries to obtain the assets in that account when the account owner dies.
- "Community property with right of survivorship." Married couples or registered domestic partners can hold assets in their names as "community property with right of survivorship." This creates a situation where the first spouse dies then the assets designated would pass directly on to the other partner without taking the will into consideration.
- Living trusts. Generally, assets held in a revocable living trust are given out regardless of the instructions in your will and instead according to the instructions within your trust, all without court supervision. Most people name themselves the trustee for their lifetime along with a successor trustee to take over in case you become unable.
- Your spouse's or domestic partner's half of community property. In California, any assets acquired by you and your spouse during marriage are considered community property. You and your spouse equally share those assets. Assets that you owned prior to the marriage, gifts, or inheritance are considered separate property which is all your will would affect.
5. What Happens If I Don't Have a Will?
If you die without a will, California law will determine the beneficiaries of your estate. This does not mean that the state automatically inherits all of your belongings. If you are married or have established a registered domestic partnership, your spouse will receive all of your community property assets. Your spouse will also receive part of your separate property assets. The rest of your separate property assets will be distributed to your children or grandchildren, parents, sisters, brothers, nieces, nephews or other close relatives.
If you are not married then your assets will be distributed to your children or grandchildren. If you have any other relatives such as nieces, nephews, brother, sisters, among others then your property will be distributed to them as well. If your spouse dies before you, then their relatives may also be entitled to some or all of your estate. Any friends or charities you contribute to will receive nothing if you die without a will. The State of California is the beneficiary of your estate if you die and you have no living relatives.
6. What If My Assets Pass To a Trust After My Death?
You can make plans in your will for all your assets to be distributed to a trust upon your death. This would be called a testamentary trust. With the correct designation, testamentary trusts can even be beneficiaries of life insurance policies and other retirement plans.
If you have a living trust then your will is commonly referred to as a pour over will. This type of will has instructions to transfer all your remaining assets to your living trust at the time of your death.
For relatively small gifts to beneficiaries who are minors, you might think about providing for transfers from your estate to a custodian under the California Uniform Transfers to Minors Act.
7. Can I Change or Revoke My Will?
Yes. You should make sure your will is always up to date and check it periodically because if something were to happen then your property may not be as distributed as you would have hoped.
Your will can be changed through a codicil, which is a legal document that must be drafted and executed with the same procedure that applies to wills. A codicil is an amendment to your will. You should not change your will by simply crossing out words or sentences, or by making any notes or written corrections on it.
Another option would be to establish a new will or revoke an old one. If you get married or divorced then you should seek advice from a lawyer to make a new will. Another suggestion would be to review your will if there are any major happenings within your family such as births or deaths, when your assets fluctuate, or when it is no longer appropriate for your proposed guardian or executor or testamentary trustee to act in that capacity.
California will honor the validity of a will valid under the law of the state you moved from. It is recommended that a will be looked over by a qualified California lawyer, however, since California will govern the probate of your will should you live here at your death. On the other side, if you move out of California with a will from here, then it should be reviewed by a lawyer in that state.
8. What Other Planning Should I Do?
- Make a list of your assets and debts. This is important and helpful should you no longer be around to provide such information. Make sure that your executor or other family members know where to find the list. You should include your bank accounts, safe deposit boxes, stocks and bonds, real estate, and other assets on the list. Also, list the names and addresses of anyone to whom you owe money.
- Make and circulate a list of your professional advisors. Letting your family members and professional advisors know the other professionals who you work with can improve communications and encourage teamwork among your advisors, streamline tasks being done for you, and ensure that the proper people are contacted in the event of your death, sickness or incompetence.
- Set up adurable power of attorney for asset management. In this document, you appoint another individual to make property management decisions on your behalf if you ever become unable to do so. This person would manage your assets and be required to act solely in your best interests.
- Consider preparing an advance health care protective/durable power of attorney for health care. This document will allow the previous individual to make any and all health care decisions for you when and if your are unable to do so yourself. This may contain your wishes in regards to life sustaining treatments, other health care issues, organ donations, burial instructions and your funeral.
9. What is a living trust?
This is a legal document that partially substitutes for a will. With this living trust your assets are administered for your benefit during your lifetime then transferred to your beneficiaries upon your death.
Most of the time people name themselves the trustee to their trust, giving them complete control over the assets put into the trust over their lifetime. You also have the option fo naming a successor trustee who will manage the assets within the trust if you should ever become unable or unwilling to do so yourself.
The living trust talked about in this FAQ refers to a revocable living trust. This trust can be amended or revoked at any time by the one or ones who created it as long as that person or people are still competent.
Your living trust agreement:
- Gives the trustee the legal right to manage and control the assets held in your trust.
- Instructs the trustee to manage the trust's assets for your benefit during your lifetime.
- Names thebeneficiaries who are to receive your trust's assets when you die.
- Gives certain powers, guidance, and authority to the trustee to manage and distribute your trust’s assets. The trustee is a fiduciary which means that person holds a position of confidence and trust that is subject to high standards and strict responsibilities.
10. What is a revocable living trust?
It is a legal document that can, in some cases, partially substitute for a will. With a revocable living trust your assets are put into the trust, administered for your benefit during your lifetime and transferred to your beneficiaries when you die. This is all without the need for court involvement.
Most people name themselves as the trustee in charge of managing their living trust’s assets. By naming yourself as trustee, you can remain in control of the assets during your lifetime. In addition, you can revoke or change any terms of the trust at any time as long as you are still competent.
In your trust agreement, you will also name a successor trustee who will take over as the trustee and manage the trust’s assets if you should ever become unable to do so. Your successor trustee would also take over the management and distribution of your assets when you die.
A living trust does not, however, remove all need for a will. Generally, you would still need a will, usually known as a pour over will, to cover any assets that have not been transferred to the trust.
11. Who should be the trustee of my living trust?
A lot of people choose to be the trustee to their own trust but others choose to get help from somewhere or someone else. This could stem from many reasons like inexperience to a lack of time.
Choosing the right trustee is very important. This person will act on your behalf with considerable authority and minimal if any court supervision. You can name co-trustees if you choose.
Discuss your choice with an estate planning lawyer. There are many issues to consider. For example, what conflicts of interest would be created if you name a spouse, child, business associate, or partner as your trustee? Or will the person named as your trustee have the time, organizational ability and/or the experience required to do the job effectively? These among others are important to consider.
12. How are my assets put into the living trust?
An important task still remains once your trust has been signed. In order to avoid court-supervised conservatorship proceedings if you should become incapacitated, or the probate process at your death, your assets must be transferred to the trustee of your living trust. This is a process known as funding the trust.
Other important tasks are that deeds to your real estate must be prepared and recorded. Bank accounts and stock and bond accounts or certificates must be transferred too. These things aren’t expensive but do require some paperwork.
A living trust can hold both separate and community property. This makes it quite convenient for spouses to plan for the management and ultimate distribution of their assets in just one document.
If you own real estate in another state, you may (depending on that state's law) transfer that asset to your trust as well to avoid probate in the other state. A lawyer from that state can help you prepare the deed and complete the transfer. If the real estate is located in California, a California lawyer should prepare the deed and advise you on transferring such property.
A lawyer can help you transfer other assets as well. For example, you should consider changing the beneficiary designations on life insurance to the trust. As for the beneficiary designations on a qualified plan, you should seek a qualified professional's advice because there are serious income tax issues.
13. If I have a living trust, do I still need a will?
Yes. Your will affects any assets that are titled in your name at your death and are not in your living trust. If you have a living trust, your will would most likely contain a pour over provision. Such a provision will simply state that all such assets should be transferred to the trustee of your living trust after your death.
Your will can nominate guardians for your minor children as well. Any and all assets held in a trust for your children would still be managed by the trustee.
14. What other estate planning documents should I have?
A durable power of attorney for property management could be helpful if you ever become incapacitated. This deals with assets that were not transferred to your living trust before you became incapacitated and any other assets that you receive afterward. With this power of attorney, you appoint another person to make financial decisions on your behalf.
This power of attorney, however, cannot replace a living trust because, among other things, it expires when you die. It also cannot provide instructions for the distribution of your assets after your death.
You could also consider setting up an advance health care directive / durable power of attorney for health care. This allows a chosen individual to make health care decisions for you when you can no longer make them for yourself. In your advance health care directive, you may state your wishes regarding life-sustaining treatment, organ donation and funeral arrangements. A health care directive can also allow an authorized agent to access your medical information. This might be important in light of more strengthened federal privacy laws.
15. What other kinds of trusts are there?
There are two other types of trusts:
- Testamentary trusts are trusts that are based on instructions in your will. These trusts are not established until after the probate process. Testamentary trusts do not address the management of your assets during your lifetime. They do allow for young children and others who would need someone to manage their assets after your death.
- Irrevocable trusts are trusts that cannot be amended or revoked once they have been created. These trusts are usually tax-sensitive documents. A few examples would be irrevocable life insurance trusts, irrevocable trusts for children, and charitable trusts.
16. Are there other ways of leaving property?
Yes. Certain kinds of assets are transferred directly to the named beneficiaries. These assets include:
- Life insurance proceeds.
- Qualified or non-qualified retirement plans, including 401(k) plans and IRAs.
- Certain “trustee” bank accounts.
- Transfer on death (or TOD) securities accounts.
- Pay on death (or POD) assets, a common title on U.S. savings bonds.
17. What is probate?
Probate is a court-supervised process for transferring a deceased person’s assets to the beneficiaries listed in his or her will.
Typically, the executor named in your will would start the process after your death by filing a petition in court and seeking appointment. Your executor would then take charge of your assets, pay your debts and, after receiving court approval, distribute the rest of your estate to your beneficiaries. If you were to die intestate (that is, without a will), a relative or other interested person could start the process.
In such an instance, the court would appoint an administrator to handle your estate. Personal representative is another term used to describe the administrator or executor appointed to handle an estate.
Simpler procedures are available for transferring property to a spouse or for handling estates in which the total assets amount to less than $100,000. The probate process has advantages and disadvantages.
The probate court is accustomed to resolving disputes about the distribution of assets fairly quickly through a process with defined rules. Also, the probate court reviews the personal representative’s handling of each estate, which could help protect the beneficiaries’ interests.
One disadvantage is that probates are public. Your estate plan and the value of your assets will become a public record. Because lawyer’s fees and executor’s commissions are based on a statutory fee schedule, a probate may cost more than the management and distribution of a comparable estate under a living trust.
Time is also a potential factor. A probate proceeding generally takes longer than the administration of a living trust.
Courtesy of the California State Bar
Calbar.ca.gov
Lonich & Patton, LLP also specializes in the areas of Family Law and Business Law.
WHERE WE PRACTICE
Lonich & Patton, LLP handles estate planning, trust administration and probate matters for clients in northern California, San Jose and Silicon Valley. Our attorneys regularly serve clients in Santa Clara County, San Mateo County, Alameda County, Contra Costa County, Santa Cruz County, Monterey County and San Benito County, including the cities of Sunnyvale, Santa Clara, Mountain View, Cupertino, Los Gatos, Campbell, Saratoga, Redwood City, Oakland, Salinas, Fremont, Hayward, Concord, Berkeley, Richmond, Morgan Hill, Milpitas, Santa Cruz, Los Altos, San Leandro, Livermore, Union City, Walnut Creek, Pleasanton, South San Francisco, Gilroy, Castro Valley, Watsonville, Newark, Hollister, Monte Sereno and Menlo Park.