“MANY CLIENTS HAVE ASKED US FOR A SIMPLE GUIDE TO OUR ESTATE PLANNING SERVICES. WE HOPE THIS PAGE WILL ANSWER YOUR QUESTIONS, AND TAKE THE MYSTERY OUT OF THE ESTATE PLANNING PROCESS.”
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Transfer Of Assets At Death
At death, assets may be transferred in one of three ways: Probate, Direct Transfers, or through a Living Trust. Probate is the process of distribution of assets under the supervision of the court. Probate is designed to protect creditors and beneficiaries. The average probate in California lasts about two years, although it is possible to probate most estates within 9-12 months. Costs of probate include executor’s and attorney’s fees, filing fee, publication fees, and extra-ordinary costs. Both the executor and the attorney receive a fee based upon a schedule determined by the state. Small estates, less than $150,000 of assets subject to probate, may be distributed without a Probate.
- Intestacy: If a person dies without an estate plan, state law will provide a distribution to the heirs of that person, as determined by state law. The distribution may not reflect your desires or values.
- Wills: A will is a document which speaks for you after your death. It tells the court how you wish to distribute the assets of your estate, and who should oversee the distribution. You may also nominate a guardian for your minor children. Contrary to what many believe, a will does not avoid probate.
- Joint Ownership: Many assets may be held by two or more persons in Joint Tenancy or Community Property. These assets transfer to the survivor automatically on the death of the deceased owner.
- Pay On Death Accounts: POD accounts direct distribution of a particular asset to a beneficiary at the death of the account owner. The beneficiary only needs to show proof of the owner’s death to receive the assets.
Living Trusts are one alternative to probate. By transferring legal ownership of one’s property to a trust during life, while retaining equitable ownership as beneficiary of the trust, probate is avoided. Some advantages of living trusts are:
- Probate is Avoided: The assets placed in a living trust are not subject to probate.
- Administration of Estate is Simpler: Administration of the estate can generally be accomplished with substantially less legal fees and without great time delays.
- Conservatorship is Generally Avoided: Since a living trust is designed to manage estate assets, conservatorships are generally not needed for the estate when the trustor becomes incapacitated. The successor trustee manages for the trustor until he or she regains capacity. If an Advance Health Care Directive is also executed, it is unlikely that a conservatorship over the person will be necessary, since the Agent named in the Advance Directive can make the decisions related to health care.
- What Is Estate Planning In California?
- When Is It Necessary To Update My Estate Plan?
- How Much Time Does It Take To Update An Estate Plan?
- What Is Probate? How Can It Be Avoided?
- Who Are The Parties Involved In Estate Planning?
- What Generally Motivates Someone To Create An Estate Plan?
- Who Should Be Notified Of Their Role In An Estate Plan?
- What Is A Conservator In California?
- What Is The General Timeline For A Conservatorship To Be Set Up?
- What Are The Challenges Faced By Adult Children In Caring For Their Parents?
- What Is The Role Of Durable Power Of Attorney In Caring For Aged Parents?
- What Actually Is An Irrevocable Trust?
- Are The Amounts That Go To Charity Excluded From Your Taxable Estate?
- What Are Gift Annuities? How Are They Used In Tax Advantage Giving?
- What Should A Person Consider When Naming A Trustee For An Irrevocable Trust?
- What Is Medi-Cal? Who Provides These Benefits?
- What Is The Most I Can Have In My Account To Qualify For Medi-Cal?
- What Areas Of Real Estate Law Do You Handle?
- How Can I Transfer My Property Tax Assessment Value To My Beneficiary?
Other Planning Tools
Many estate planners recommend, in addition to a will or trust, that Durable Powers of Attorney and Advance Health Care Directives be drafted.
An Advance Health Care Directive permits another person to make health care decisions for you, including decisions about life support systems, long-term care, pain relief, organ donation, and funeral and burial or cremation. This document is becoming increasingly important. Hospitals routinely ask patients for a signed a heath care directive when the patient is admitted for treatment.
A General Durable Power of Attorney is often drafted so that the successor trustee may manage assets which may exist outside the trust estate. This power may be effective immediately, or upon the incapacity of the Principal.
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