Common Questions on Estate Planning

Probate is the legal process through which the court sees that, when you die, your debts are paid and your assets are distributed according to your will or where no will under California probate law that stipulates shares to your closest living relatives, beginning with spouse and children. If you don’t have a valid will, your assets are distributed according to state law to your closest living relatives.

It can be expensive. Legal/executor fees and other costs must be paid before your assets can be fully distributed to your heirs. If you own property in other states, your family could face multiple probates, each one according to the laws in that state. Because these costs can vary widely, be sure to get an estimate.

It takes time, usually 9 months to 2 years. During part of this time, assets are usually frozen so an accurate inventory can be taken. Nothing can be distributed or sold without court and/or executor approval. If your family needs money to live on, they must request a living allowance, which may be denied.

Your family has no privacy. Probate is a public process, so any “interested party” can see what you owned and who you owed. The process “invites” disgruntled heirs to contest your will and can expose your family to unscrupulous solicitors.

Your family has no control. The probate process determines how much it will cost, how long it will take, and what information is made public.

Conventional wisdom is that a will may be acceptable, but this wisdom is misplaced –primarily because a will does not avoid probate when you die. A will must be accepted by the probate court before the chosen executor can act and take care of matter such as distribution of assets to beneficiaries.

A will is also unacceptable because it provides no protection if you become physically or mentally incapacitated. In the event of  incapacity, your loved one may have to go to court to establish a conservatorship to manage the assets of a loved one.

For these and other reasons, the revocable living trust has proven to be the best solution for passing on your wealth to loved ones. A trust avoids probate, and lets you keep control of your assets while you are living and then leaves someone you have chosen to distribute your assets upon death without the need for court intervention.

Joint ownership is a common form of ownership for such items as real estate and bank accounts. Joint ownership with right of survivorship leaves the property to the coowner upon the death of one owner. A will does not control who gets this property. Not even a trust. 

With joint ownership, when the surviving owner dies, ordinarily probate is required. In effect, probate has been delayed but not avoided with joint ownership. Now that the surviving owner has died, the asset must be probated before it can go to the heirs of the survivor.

There are other problems. When you add a co-owner, you now have another person who has say in decisions relating to the management and distribution of the property. In effect, you lose control. Your chances of being named in a lawsuit and of losing the asset to a creditor are increased. 

A living trust is a legal document that, just like a will, contains your instructions for what you want to happen to your assets when you die. But, unlike a will, a living trust avoids probate at death, can control all of your assets, and prevents the court from controlling your assets in the event you or your loved one suffers from incapacity and no longer can handle their financial affairs.

Yes. A durable power of attorney lets you name someone to manage your financial affairs if you are unable to do so. However, many financial institutions won’t honor one unless it’s on their form. When the power of attorney does work, you have to consider the fact that the person you have selected to manage your affairs ordinarily has enormous power, in effect almost like a “blank check” to do whatever your appointed agents wants with your assets. A power of attorney is usually created with your living trust.

When you create a living trust, you typically place the assets in your name but in a new role as trustee of your trust. In this same document, you select someone to take over when you cannot act any longer due to incapacity or death. By making these choices and transferring assets to the trust, court involvement is avoided.

By establishing a trust, you continue to keep full control of your property. As trustee of your trust, you can do anything you could do before — buy/sell assets, change or even cancel your trust (that’s why it’s called a revocable living trust). You even file the same tax returns. Nothing changes but the names on the titles.

The process of transferring assets to the trust is relatively simple. Your attorney, trust officer, financial adviser, and insurance agent can help. You need to change titles on real estate, which is normally done by your attorney, and other titled assets (stocks, CDs, bank accounts, other investments, insurance, which normally can be done by you with the assistance of your financial adviser or insurance agent. All of this can be done quickly, much quicker than the lengthy process involving probate of a will.

If you and your spouse are co-trustees, either can act and have instant control if one becomes incapacitated or dies. If something happens to both of you, or if you are the only trustee, your handpicked successor trustee will step in. If a corporate trustee is already your trustee or co-trustee, they will continue to manage your trust for you.

While you may decide to be the trustee of your trust, you can also select a corporate trustee (bank or trust company) to act as trustee or co-trustee. This may be appropriate if you do not have the time, ability, or desire to manage the trust, if you or your spouse become ill and where the size of the estate is substantial, or involves complex management decisions. Corporate trustees are experienced investment managers, they are objective and reliable, and their fees are usually very reasonable

If you become incapacitated, your successor trustee looks after your care and manages your financial affairs for as long as needed, using your assets to pay your expenses. If you recover, you automatically resume control. When you die, your successor trustee pays your debts and distributes your assets. All this is done quickly and privately, according to instructions in your trust, without court interference.

Successor trustees can be individuals (adult children, other relatives, or trusted friends) and/or a corporate trustee. If you choose an individual, you should name more than one in case your first choice is unable to act.

Unlike a will, a trust doesn’t have to die with you. Assets can stay in your trust, managed by the person or corporate trustee you have chosen – until your beneficiaries (including minor children) reach the age(s) you want them to inherit, or to provide for a loved one with special needs.

It can with proper planning particularly for married couples. Tax laws are changing so you should speak to Mr. Rosemblat when you make the office appointment on this subject.

Not when compared to all the costs of court interference at incapacity and death. How much you pay will depend on how complicated your plan is. Be sure to get an estimate.

It should only take a few weeks to prepare the legal documents after you make the basic decisions, but can take shorter, depending on your personal circumstances.

Yes, but you need the right attorney. A local attorney who has considerable experience in living trusts will be able to give you valuable guidance and peace of mind that your trust is prepared properly. In some states, qualified paralegals can now also prepare trust documents; however, they cannot give you legal advice.

Yes, you need a “pour-over” will that acts as a safety net if you forget to transfer an asset to your trust. When you die, the will “catches” the forgotten asset and sends it into your trust. The asset may have to go through probate first, but it can then be distributed as part of your living trust plan.

No. A living trust is for financial affairs. A living will is for medical affairs—it lets others know how you feel about life support in terminal situations. Your instructions on medical affairs can be incorporated into an Advance Health Care Directive, also known as a Power of Attorney of Health Care.

Age, marital status and wealth don’t really matter. If you own titled assets and want your loved ones (spouse, children or parents) to avoid court interference at your death or incapacity, consider a living trust. You may also want to encourage other family members to have one so you won’t have to deal with the courts at their incapacities or deaths.

• Avoids probate at death, including multiple probates if you own property in other states
• Prevents court control of assets at incapacity
• Brings all your assets together under one plan
• Provides maximum privacy
• Quicker distribution of assets to beneficiaries
• Assets can remain in trust until you want beneficiaries to inherit
• Can reduce or eliminate estate taxes
• Inexpensive, easy to set up and maintain
• Can be changed or cancelled at any time
• Difficult to contest
• Prevents court control of minors’ inheritances
• Can protect dependents with special needs
• Prevents unintentional disinheriting and other problems of joint ownership
• Professional management with corporate trustee
• Peace of mind