1. WHAT IS ESTATE PLANNING?
Estate planning is a process. It involves individuals -your family, other people and in most cases charitable organizations of your choice. It likewise includes your assets and all the various types of ownership and title that those assets might take.
As you prepare your estate, you will think about:
* How your properties will be handled for your advantage if you are unable to do so
* When specific properties will be transferred to others, either during your life time, at your death, or at some point after your death
* To whom those possessions will pass
Estate planning also addresses your welfare and requires, planning for your own individual care and healthcare if you are no longer able to take care of yourself. Like many people, you may in the beginning believe that estate planning is just the writing of a will. But it includes much more. As you will see, estate planning may include monetary, tax, medical and organisation planning. A will is one part of that planning process, however other documents are needed to fully resolve your estate planning needs. The purpose of this product is to sum up the estate planning procedure and how it can attend to and fulfill your goals and goals.
As you consider it even more, you will recognize that estate planning is a dynamic procedure. Simply as people, possessions and laws modification, it might well be necessary to adjust your estate plan once in awhile to show those modifications.
2. WHAT IS INVOLVED IN ESTATE PLANNING?
In beginning to consider your estate plan, I ask my customers to finish a brief survey to respond to the very first of the following concerns and throughout our initial conference we go over the other concerns:
* What are my possessions and what is their approximate value?
* Whom do I wish to receive those possessions -and when?
* Who should handle those assets if I can not, either during my life time or after my death?
* Who should have the obligation for the care of my minor kids, if any, if I become incapacitated or die?
* If I can not take care of myself, who should make decisions on my behalf worrying my care and welfare?
3. WHO NEEDS ESTATE PLANNING?
Whatever the size of your estate, you ought to designate the individual who, in case of your incapacity, will have the responsibility for the management of your possessions and your care, consisting of the authority to make healthcare choices in your place. How that is accomplished is gone over below in this product. If your estate is small in worth, you may focus simply upon who is to receive your possessions after your death and who must be in charge of its management and distribution.
If your estate is bigger, we will discuss with you not just who is to get your properties and when, but also various methods to protect your properties for your beneficiaries and to lower or delay the amount of estate tax which otherwise may be payable on your death.
If one does no planning, then California law provides for the court consultation of persons to take responsibility for your individual care and assets. California likewise attends to the distribution of properties in your name to your beneficiaries pursuant to a set of guidelines to be followed if you die without a will; this is called "intestate succession." If you die without a will and if you have any loved ones (whether through your own household or that of your spouse), despite how remote, they will be your heirs. Nevertheless, they might not be the people you would want to acquire from you; for that reason, a living trust or a will is the more suitable technique.
4. WHAT IS INCLUDED IN MY ESTATE?
Your estate consists of all residential or commercial property or interests in residential or commercial property which you own. The most basic examples are those assets which are in your name alone, such as a savings account, real estate, stocks and bonds, furniture, furnishings and fashion jewelry.
You might also hold residential or commercial property in many forms of title other than in your name alone. Joint tenancy is a common type of ownership which takes possessions away from control by will or living trust. Beneficiary designations on securities accounts and checking account are options which should be thoroughly considered as well.
Lastly, possessions which have beneficiary classifications, such as life insurance coverage, IRAs, certified retirements strategies and some annuities are really fundamental parts of your estate which need cautious coordination with your other possessions in developing your estate plan.
The value of your estate is equal to the "reasonable market price" of each possession that you own, minus your debts, consisting of a home mortgage on your house or a loan on your cars and truck.
The worth of your estate is very important in determining whether, and to what level, your estate will be subject to estate taxes upon your death. Planning for the resources needed to satisfy that obligation at your death is another fundamental part of the estate planning process.
5. WHAT IS A WILL?
A will is a standard legal document which works only at your death to:
* Name people (or charitable organizations) to receive your assets upon your death (either by outright present or in trust).
* Nominate an administrator, designated and supervised by the probate court, to handle your estate, pay debts and expenses, pay taxes, and disperse your estate in a responsible manner and in accordance with your will.
* Nominate the guardians of the individual and estate of your small kids, to care and offer your small kids.
Possessions or interests in property in your name alone at your death will be subject to your will and based on the administration of the probate court, generally in the county where you live at your death.
6. WHAT IS A REVOCABLE LIVING TRUST?
A revocable living trust is also commonly described as a revocable inter vivos trust, a grantor trust or, just, a living trust. A living trust might be changed or revoked by the individual producing it (commonly called "trustor," "grantor," or "settlor") at any time during the trustor's lifetime, as long as the trustor is qualified.
A trust is a written agreement in between the individual producing the trust and the person or organization named to handle the properties kept in the trust (the "trustee"). In a lot of cases, it is suitable for you to be the initial trustee of your living trust, until management help is expected or required, at which point your trust ought to designate a specific, bank or trust company to act in your place.
The regards to the trust become irreversible upon the trustor's death. Because the trust consists of provisions which offer the circulation of your assets on and after your death, the trust acts as an alternative to your will, and removes the need for the probate of your will with respect to those properties which were kept in your living trust at your death.
You ought to carry out a will even if you have a living trust. That will is usually a "pour over" will which attends to the transfer of any possessions kept in your name at your death to the trustee of your living trust, so that those assets might be distributed in accordance with your desires as stated in your living trust.
7. WHAT IS PROBATE?
Probate is the court-supervised procedure established under California law which has as its goal the transfer of your assets at your death to the beneficiaries stated in your will, and in the way prescribed by your will. It likewise offers the reasonably quick determination of legitimate claims of any creditors who have claims against your assets at your death.
At the beginning of probate administration, a petition is submitted with the court, normally by the individual or organization called in your will as executor. After notice is given, and a hearing is held, your will is admitted to probate and an executor is designated. If you die "intestate" (that is, without a will), your estate is still subject to probate court administration and the person appointed by the court to handle your estate is known as the "administrator.".
If the assets in your name alone at your death do not include an interest in realty and have a total worth of less than $100,000, then generally the recipients under your will might follow a statutory treatment to effect the transfer of those properties pursuant to your will, based on your financial obligations and expenditures, without an official court-supervised probate administration.
A probate has benefits and drawbacks. The probate court is accustomed to dealing with conflicts about the distribution of your assets in a relatively expeditious fashion and in accordance with specified guidelines. In addition, you are guaranteed that the actions and accountings of your executor will be reviewed and approved by the court of probate.
Drawbacks of a probate include its public nature; your estate plan and the worth of your properties ends up being a public record. Also, since lawyer's charges and executor's commissions are based upon a statutory cost schedule calculated upon the gross (not the net) worth of the possessions being probated, the expenses might be higher than the expenses sustained by a similar estate managed and dispersed under a living trust. Time can also be a factor; frequently circulations can be made pursuant to a living trust faster than in a probate proceeding.
8. TO WHOM SHOULD I LEAVE MY ASSETS?
When you have identified who ought to get your assets at your death, I can assist you clarify and appropriately recognize your beneficiaries. For example, it is most important to plainly determine by correct name any charitable companies you wish to offer; lots of have similar names and in some families, people have similar and even similar names.
It is also crucial for you to consider alternative circulation of your assets in case your main beneficiary does not survive you.
As for beneficiaries who by factor of age or other infirmity might not have the ability to handle properties dispersed to them outright, trusts for their benefit may be produced under your will or living trust.
9. WHOM SHOULD I AS MY EXECUTOR OR TRUSTEE?
After your death, the administrator of your will and the trustee of your living trust serve nearly identical functions. Both are responsible for guaranteeing that your dreams, as stated in your will or living trust, are implemented. Although your executor is normally based on direct court guidance, both the executor and the trustee have similar fiduciary obligations. The trustee of your living trust might presume duties under that document while you are living.
While you may serve as the initial trustee of your living trust, if you end up being incapable of working as a trustee, the designated follower trustee will then action in to handle your properties for your advantage. An administrator or trustee might be a partner, adult kids, other loved ones, household good friends, business associates or a professional fiduciary such as a bank.
I discuss this matter will my clients. There are a number of problems to consider. For example, will the visit of one of your adult children trigger excessive tension in his or her relations with siblings? What conflicts of interest are created if a company partner or partner is called as your administrator or trustee? Will the person named as executor or successor trustee have the time, organizational capability and experience to do the task effectively?
10. HOW SHOULD I PROVIDE FOR MY MINOR CHILDREN?
A small kid is a kid under 18 years of age. If both parents are deceased, a minor kid is not lawfully qualified under California law to care for himself or herself. In your will, for that reason, you must choose a guardian of the person of your minor kids to monitor that child and be responsible for his/her care till the kid is 18 years old.
Such an election can avoid a "tug of war" in between well-meaning relative and others if a guardian is required.
A minor is likewise not lawfully qualified to manage his/her own residential or commercial property. Possessions moved outright to a small must be held for the small's advantage by a guardian of the child's estate, until the kid achieves 18 years of age. You ought to choose such a guardian in your will also. In offering minor kids in your estate strategy, you should think about using a trust for the kid's benefit, to be held, administered and dispersed for the child's advantage up until the kid is at least 18 years of ages or some other age as you may decide. You might also think about a custodian account under the California Uniform Transfers to Minors Act as an alternative in making particular presents to minors.
11. WHEN DOES ESTATE PLANNING INVOLVE TAX PLANNING?
Estate taxes are imposed upon an estate which has a net worth, in 2002, of $1,000,000 or more. Under present law, that amount will increase, in unequal increments, to $3,500,000 in 2009. Estate taxes are set up to be repealed for 2010. In 2011, estate tax will revert to the law which existed before the enactment of the 2001 tax law modifications, so that an estate which has a net worth of $1,000,000 or more will undergo estate taxes. (See Estate Planning Under the 2001 Tax Relief Act: What To Know And What To Do). For estates which approach or surpass the exemption quantity, significant estate taxes can be conserved by appropriate estate planning, usually prior to death and, when it comes to married couples, before the death of the first partner. Estate planning for tax functions must take into account not only estate taxes, however also earnings, gift, residential or commercial property and generation-skipping taxes as well. Qualified legal advice about taxes ought to be gotten throughout the estate planning pr!ocess.
12. HOW DOES THE WAY IN WHICH I HOLD TITLE MAKE A DIFFERENCE?
The nature of your assets and how you hold title to those assets is an important consider the estate planning procedure. Before you change title to a possession, you must comprehend the tax and other repercussions of any proposed change. I will be able to recommend you about such matters.
Community home and separate residential or commercial property.
If you are married, assets earned by either you or your partner while married and while a homeowner of California are neighborhood property. On the other hand, a married individual might own different property as an outcome of properties owned prior to marital relationship or received by present or inheritance throughout marriage. There are considerable tax factors to consider which require to be dealt with in the estate planning procedure with regard to both neighborhood property and separate home. There are likewise considerable residential or commercial property interests to consider.
Different home can be "transmuted" (that is, changed) to neighborhood residential or commercial property by a composed agreement signed by both partners and prepared in conformity with California law.
It is important to look for skilled legal advice when identifying what character your residential or commercial property is and how the home must be titled.
Joint Tenancy Property.
Regardless of its source, if a home is held in joint tenancy, it will pass to the surviving joint tenant by operation of law upon the death of the first joint tenant. On the other hand, residential or commercial property held as community residential or commercial property or as renters in common, will undergo the will of a departed owner.
13. WHAT ARE OTHER METHODS OF LEAVING PROPERTY?
A number of properties are transferred at death by recipient designation, such as:.
* Life insurance coverage earnings.
* Qualified or non-qualified retirement strategies, including 401( k) plans and IRAs.
* Certain "trustee" bank accounts.
* "Transfer on death" (or "TOD") securities accounts.
* "Pay on death" (or "POD") properties, a typical title on U.S. Savings bonds.
These recipient designations should be carefully collaborated with your general estate strategy. Your will does not govern the distribution of these assets.
14. WHAT IF I BECOME UNABLE TO CARE FOR MYSELF?
If you do not make any arrangements ahead of time, a court-supervised conservatorship case might be needed if you become incapacitated.
Conservatorships are procedures which enable the court to select the person responsible for your care and for the management of your estate if you are unable to do so yourself.
You should, for that reason, choose the individual or individuals you want to care for you and your estate in the event that you end up being incapable of handling your assets or offering your own care.
With regard to the management of your assets, the trustee of your living trust will provide the needed management of those properties held in trust. Nevertheless, to handle assets which may not have been moved to your living trust prior to your inability or which you might get after incapacity, a durable power of attorney for residential or commercial property management need to be thought about. In such a power, you appoint another individual (the "attorney-in-fact") to make residential or commercial property management choices in your place. The attorney-in-fact handles your possessions and functions much as a conservator of your estate would operate, however without court guidance. The authority of the attorney-in-fact to handle your properties stops at your death.
A long lasting power of attorney for healthcare permits your attorney-in-fact to make healthcare choices for you when you can no longer make them yourself. It might likewise include statements of dreams worrying such matters as life sustaining treatment and other healthcare concerns and guidelines worrying organ contribution, disposition of remains and your funeral.
15. WHO SHOULD HELP ME WITH MY ESTATE PLANNING DOCUMENTS?
Can I Do It Myself?
Wills get more info and trusts are legal documents which ought to be prepared only by a certified lawyer. You need to watch out for companies or offices who are staffed by non-lawyer personnel and who promote "one size fits all" living trusts or living trust kits. An estate strategy produced by someone who is not a qualified lawyer can have enormous and pricey effects for your estate and might not accomplish your goals and objectives. Nevertheless, lots of other experts and company representatives may become involved in the estate planning procedure. For instance, accredited public accountants, life insurance coverage sales representatives, bank trust officers, financial planners, workers managers and pension consultants typically participate in the state planing process. Within their locations of know-how, these specialists can assist in planning your estate.
16. WHAT ARE COSTS INVOLVED IN ESTATE PLANNING?
The expenses of estate planning depend on your individual scenarios and the complexity of documents and planning required to attain your goals and goals. The costs usually will include my charges for putting your financial information into my digital estate planning program which enables me to graphically reveal you the effects of alternate strategies, discussing your estate plan with you and for preparing your will, trust arrangement or other legal documents which you might need.