If Estate Planning gets confusing, seek out Trusted Guidance.

If you fail to plan your estate and die without a will, California law has created a plan (intestate succession) for you. More commonly known as Probate or Probate Court, the entire system, which is set forth by statute, is too complex for a discussion here, but some surprising and frequently undesirable results can occur. First, probate is costly and time consuming, taking time and money away from the people you love. Second, the law determines both the persons to whom your property will pass and how your estate will be divided among those persons, which may not satisfy how you would like things to work. The courts may even determine to whom your minor children will go if you pass before choosing a legal guardian for them.

If you create a will for your estate, you can instruct your Executor to distribute property pursuant to the terms you set in the will. Thus, a will does give you the power to distribute property controlled by the will in the manner you instruct when you die. Although this is enough benefit for some client, there are three major drawbacks of a Will:

1. The will does not speak until you die. A will does not provide any protections against your incapacity. This means that if you were to become incapacitated your assets may be locked from use, even for your own benefit.
2. When you die, the property passing through your will must still pass through the probate process. Probate is a public, expensive and time-consuming process. Although a will gives you more say in how things will work, it does not help you avoid probate.
3. A Will is limited in power. Because it does not speak until you die only having a will fails to also provide practical living protections like a Power of Attorney, HIPPA Waivers and medical decision guidance. Wills also do not provide the right framework for more complex goals like establishing protections for a beneficiary with special needs.

Probate exists to ensure the fair transfer of assets between people after someone dies and leaves behind property. The best way to avoid probate is to have a Trust or Estate Plan in place. If you do not have a plan in place and your estate is probated it will also suffer a few consequences. First, probate is a public process, which means anyone can find out that your estate is being probated and may complain about the terms of your Will without cost. Second, the probate process is very slow. Not until after the court feels comfortable that potential creditors have been paid will it release monies to your beneficiaries. In the Bay Area, this typically takes about 10 months, during which time your beneficiaries will have limited access to your property. Lastly, probate is expensive. California law specifically states the amount that probate will cost. For an estate with 1 million dollars of assets, probate costs $23,000 and that’s merely to process the estate and does not include the costs for other necessary legal actions that may be required.

When an estate goes through probate or when a Trust needs to acted upon it must be administered, which involves the processing of required forms, the collection of assets, payment of liabilities, and distribution of properties to the beneficiaries or heirs after payment of creditors. Failure to administer an estate properly, whether in intestate (without a Will) can result in unnecessary costs, delay and hassle.

These terms stand for a personal representative you name in your will or estate plan that serves as the representative of your probate estate. You may be more familiar with the terms "executor" or "administrator" for such an individual.

Proceeds from life insurance policies and retirement benefits will pass in accordance with the beneficiary designations. In addition, property held in certain joint tenancies with right of survivorship (e.g., joint bank or brokerage accounts with right of survivorship) will pass to the surviving account holder. Therefore, you should review the beneficiary designations and account agreements to be sure they are coordinated with your estate plan.

A Trust is a legal structure that allows people to pass property owned by someone to heirs they choose after they die. How a trust works can be thought of in terms of a giant safe. The person(s) establishing the Trust, typically called the settlors, grantors or trustors, place their assets in the safe by retitling the assets in the name of the Trust or assigning the assets to the Trust. The assets in the safe are managed by the safe watcher, better known as the Trustee.

The safe also contains instructions for how the settlors want their property to pass, and to whom, after they die. Unlike a will, a Trust also contains instructions for personal health decisions and asset management in the event of incapacity. This makes the trust a ‘living’ document which can speak for the Settlor from the date it is signed if necessary.

Trusts also carry another practical benefit since some assets can be placed in a trust such that an heir may receive a step up in value of property and in doing so avoid large tax events.

Unlike a will, a Revocable Living Trust can be used to protect you and your beneficiaries while you are alive, but incapacitated. Since Estate Plans often contain important personal health care instructions, such as your choice around long term life support, they can be used to help protect you while you are alive. A Revocable Living Trust can also be structured to help your future beneficiaries while you are alive but incapacitated or unable to make decisions. Unfortunately, since a Will can only be enacted after someone dies, it can’t provide these same protections.

A Trustee is one to whom property is transferred for the benefit of someone else (the beneficiary). Using our example above, the Trustee is the person watching over the safe. They oversee and manage the assets in the safe, safeguard that the instructions you placed in the safe are followed and ensure intended beneficiaries can get property from the safe when appropriate or necessary. If you build a Trust, it is important to carefully select your Trustee(s) since they serve in your place if you are incapacitated or deceased. It is also important to choose someone who is equipped and willing to serve. The family member who comes to mind as a logical first choice may not want to deal with the management of your assets. They may live in a location or have an occupation that makes performing the duties of Trustee difficult. Given this it is important to choose someone you trust, check to be sure they will help, and change your choice over time if another choice is better suited to the task.

Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and
Wisconsin are community property states. These states use marital property law schemes that differ markedly from the other states that use the common law scheme and somewhat with each other. Under the community property system, marital property generally is deemed to be owned one-half by each spouse, regardless of the legal title to the property.

In common law jurisdictions (such as Michigan) in the past, legal title generally controlled the ownership interests. In community property states, marital property takes its character from the manner and time of acquisition.

The Generation-Skipping Transfer Tax is a Federal Transfer Tax that is separate from the gift and estate taxes. Generally, it applies to a transfer of property to a grandchild. It also applies to a transfer in trust for a child’s lifetime with the property being distributed to grandchildren upon the child's death. There are exemptions from the Generation-Skipping Transfer Tax. Each person may transfer up to a certain amount without the tax being imposed. With proper planning, a couple may transfer each of their exemptions before this tax is imposed. If the tax is imposed, then the transfer is taxed at the highest estate tax rate.

The other parent, but if the other parent is not living, this becomes a selection of a
“guardian” you can make in your will or Estate Plan. If you fail to do so, the court will make the choice for you. Needless to say, you should assume the responsibility for this important decision and not leave it up to a judge.

Clients frequently tell us that they have chosen one of their parents as the "guardian" in the event of both clients' deaths. A quick mathematical computation may shed light on the advisability of this choice. For example, assume that the client's youngest child is 3 years old and the client's parent is 58. When that child is 15 (i.e., during a time when
adult-child communication can be difficult under the best of conditions), the grandparent will be 70.

Under these circumstances another choice may be better for your child. You should look first to your contemporaries in your families (such as brothers, sisters, or cousins). If none is appropriate, then consider friends with children in the same age range as yours. In any case, you should consult with the proposed guardian to ensure that the person is agreeable to assuming this significant responsibility.

If both parents die, your minor children may be left with substantial property interests that need management and protection. Because the guardian has only limited power over the minor's property, protective proceedings may be initiated in which the court will appoint a guardian to administer the children's property and affairs. A court appointed guardian can be a cumbersome and expensive manner of dealing with the property of the minors, however, and it should be avoided. The guardianship can be avoided by proper planning for the use of trusts for minors.

If you have planned your estate properly, the guardian should not experience financial strain in raising your children. We usually suggest that upon the death of you and your spouse, a trust be established for your minor children. The trustee should be encouraged to make generous distributions to assist the guardian - and even provide the funds to pay for any necessary expansion of the guardian's home.

We recommend you amend your trust when there are significant changes to your wealth, health, values, or the lives of your beneficiaries and representatives. If a plan becomes outdated, it can diverge from the intentions of the settlors and in some instances no longer be considered valid. Given this, we encourage people to view their estate plan as coverage that you can edit over time as your life and preferences change. When viewed this way an estate plan becomes much more empowering by giving people an active vehicle to protect the people they love versus a pile of dust collecting legal contracts that, despite being well intended, hasn’t been updated to reflect reality.

To this end Trusted offers Flex Protection, a maintenance program that allows you to make most amendments to your existing trust without unexpected or expensive attorney fees. Likewise, do not hesitate to contact us any time you have questions as to whether or not changes in tax or other substantive laws may affect your estate plan.

A Power of Attorney is an instrument in writing by which one person, as principal, appoints another as his/her agent and gives him/her authority to perform certain specified acts or kinds of acts on behalf of the principal. The person holding a Power of Attorney is known as an "attorney in fact" or "agent." We have found that many clients want to appoint someone to act for them, particularly in the event of disability. The Power of Attorney acts in addition to the Trust and generally allows the agent to control assets and deal with liabilities—which are not part of the trust.

Generally, a Power of Attorney terminates on the disability of the principal, but the California Probate Code contains provisions that allow a Power of Attorney to remain effective, even in the event of incapacity. Such a Power of Attorney is referred to as a "Durable" Power of Attorney. Under these provisions, a written Power of Attorney specifically provides that in the event of disability or incapacity of the principal, the agent’s powers are not affected and they can continue to act on the behalf of the principal.

Given the authority and discretion provided by a general Power of Attorney, the agent must be someone in whom the principal has complete trust and confidence.

A Power of Attorney for Health Care, now called an Advance Medical Directive, accomplishes three important tasks. First, the Advance Medical Directive names health care agents to make medical care decisions for you in the event you are not able to make those decisions. Second, the Advance Medical Directive provides your instructions to physicians and hospitals on whether or not to continue with or withdraw life support procedures in the event of a terminal condition. Finally, the Advance Medical Directive sets forth your decisions on whether you wish to be an organ and/or tissue donor.

Absolutely. Pet's are not only companions, for most pet owners they are part of the family and, as such, are often directly planed for in an Estate Plan. Knowing to whom your pet would go is important but often anticipated. What people may not anticipate, however, is the practical burden a pet carries. In addition to choosing a pet guardian, we encourage pet owners to set aside money for the pet guardian to compensate them for the pet's needs and healthcare, not to mention providing the guardian with some compensation for their help in caring for your furry family.

Trust Litigation involves contesting an estate or defending an estate from lawsuits. Often Trust litigation involves challenging the decisions of the Trustee, dealing with claims against the estate, or trying to have a trust edited due to its failure to achieve the settlor's intentions.

Most estate plans, especially those done by a professional estate planning attorney and maintained over time, are not litigated. That said, lots of people die so Trust Litigation is an everyday occurrence in the bay area.

What's important to remember is that Trust Litigation is like other forms of litigation. It involves deposing witnesses, filing court motions and arguing the case in front of a judge. Given this is should not be handled casually or by someone without proper experience.

Once your plan is completed your Trusted attorney will contact you for an office visit. During this visit, we will review your trust to ensure you understand your choices and review important next steps that need to be completed. Using our safe metaphor, having a trust but failing to finalize it is like building your safe but failing to place your important things in it.

The actions that need to take place after signing your trust include transferring your bank accounts and property into the trust, informing your chosen agents of their potential responsibilities, and ensuring relevant retirement savings and insurance policies reflect your trust if appropriate.

There are a number of people you may which to include in your estate plan to act on your behalf or to fulfil your wishes. The list below lists the agents most common in Estate Planning.

• Trustee: A Trustee is the person you choose to look after the day to day financial decisions of your trust. They determine after understanding your estate plan instructions who and when to distribute money to beneficiaries and make other important decisions around a trust like preserving its value.
• Trust Protector: A Trust Protector does not control day to day decisions over the estate like a Trustee, but is there to check on the Trustee to ensure their decisions are consistent with the intention of the trust.
• Guardian: A Guardian is a person you choose to look after people who are dependant on you until they reach independence. Especially for families with children, choosing a guardian you trust is one of the most important reasons to build a proper estate plan.