1. WHAT IS ESTATE PLANNING?
Estate planning is a process. It includes individuals -your household, other individuals and in most cases charitable companies of your choice. It also involves your properties and all the various kinds of ownership and title that those possessions may take.
As you prepare your estate, you will consider:
* How your possessions will be managed for your benefit if you are unable to do so
* When particular possessions will be moved to others, either throughout your life time, at your death, or at some point after your death
* To whom those assets will pass
Estate planning likewise resolves your well-being and requires, planning for your own personal care and healthcare if you are no longer able to look after yourself. Like lots of people, you might at first believe that estate planning is simply the writing of a will. But it incorporates a lot more. As you will see, estate planning may include financial, tax, medical and business planning. A will is one part of that planning process, however other documents are needed to completely resolve your estate planning requirements. The purpose of this product is to sum up the estate planning process and how it can attend to and satisfy your goals and goals.
As you consider it even more, you will understand that estate planning is a dynamic process. Just as people, possessions and laws change, it might well be essential to change your estate strategy every so often to show those changes.
2. WHAT IS INVOLVED IN ESTATE PLANNING?
In starting to consider your estate plan, I ask my customers to complete a short survey to address the first of the following concerns and throughout our preliminary conference we talk about the other concerns:
* What are my properties and what is their approximate worth?
* Whom do I wish to receive those assets -and when?
* Who should manage those assets if I can not, either throughout my life time or after my death?
* Who should have the responsibility for the care of my minor children, if any, if I end up being incapacitated or pass away?
* If I can not take care of myself, who should make decisions on my behalf concerning my care and welfare?
3. WHO NEEDS ESTATE PLANNING?
Whatever the size of your estate, you need to designate the person who, in the event of your incapacity, will have the obligation for the management of your assets and your care, including the authority to make health care decisions on your behalf. How that is achieved is discussed listed below in this product. If your estate is little in worth, you might focus simply upon who is to get your properties after your death and who must supervise of its management and circulation.
If your estate is larger, we will discuss with you not only who is to get your properties and when, however also different methods to preserve your assets for your recipients and to lower or postpone the amount of estate tax which otherwise might be payable on your death.
If one does no planning, then California law provides for the court appointment of persons to take responsibility for your individual care and possessions. California also attends to the circulation of possessions in your name to your heirs 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 family or that of your spouse), despite how remote, they will be your beneficiaries. However, they may not be the people you would wish to inherit from you; for that reason, a living trust or a will is the more effective approach.
4. WHAT IS INCLUDED IN MY ESTATE?
Your estate consists of all residential or commercial property or interests in home which you own. The easiest examples are those possessions which remain in your name alone, such as a checking account, realty, stocks and bonds, furniture, furnishings and fashion jewelry.
You might also hold residential or commercial property in many forms of title besides in your name alone. Joint tenancy is a common kind of ownership which takes assets far from control by will or living trust. Beneficiary designations on securities accounts and savings account are alternatives which should be thoroughly thought about as well.
Finally, possessions which have beneficiary classifications, such as life insurance coverage, IRAs, certified retirements plans and some annuities are really important parts of your estate which require careful coordination with your other properties in developing your estate strategy.
The worth of your estate is equal to the "fair market price" of each property that you own, minus your debts, including a home mortgage on your home or a loan on your automobile.
The worth of your estate is very important in identifying whether, and to what extent, your estate will be subject to estate taxes upon your death. Planning for the resources needed to satisfy that responsibility at your death is another vital part of the estate planning procedure.
5. WHAT IS A WILL?
A will is a conventional legal document which works only at your death to:
* Name people (or charitable companies) to receive your assets upon your death (either by straight-out gift or in trust).
* Nominate an executor, appointed and supervised by the court of probate, to manage your estate, pay debts and expenditures, 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 minor children, to care and offer your minor children.
Possessions or interests in home in your name alone at your death will be subject to your will and based on the administration of the probate court, typically in the county where you reside 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 may be changed or withdrawed by the individual producing it (frequently referred to as "trustor," "grantor," or "settlor") at any time during the trustor's life time, as long as the trustor is qualified.
A trust is a written agreement in between the individual developing the trust and the individual or institution called to manage the possessions kept in the trust (the "trustee"). In many cases, it is proper for you to be the preliminary trustee of your living trust, till management support is expected or needed, at which point your trust need to designate a private, bank or trust company to act in your place.
The terms of the trust ended up being irreversible upon the trustor's death. Due to the fact that the trust consists of arrangements which provide for the distribution of your possessions on and after your death, the trust serves as a substitute for your will, and removes the need for the probate of your will with respect to those properties which were held in your living trust at your death.
You should execute a will even if you have a living trust. That will is generally a "pour over" will which offers the transfer of any properties held in your name at your death to the trustee of your living trust, so that those assets may be dispersed in accordance with your wishes as stated in your living trust.
7. WHAT IS PROBATE?
Probate is the court-supervised procedure developed under California law which has as its goal the transfer of your possessions at your death to the recipients set forth in your will, and in the manner prescribed by your will. It also provides for the fairly fast determination of valid claims of any creditors who have claims against your possessions at your death.
At the beginning of probate administration, a petition is filed with the court, generally by the person or institution named in your will as administrator. After notification is provided, and a hearing is held, your will is confessed to probate and an administrator is selected. If you pass away "intestate" (that is, without a will), your estate is still based on court of probate administration and the person designated by the court to manage your estate is called the "administrator.".
If the assets in your name alone at your death do not consist of an interest in property and have an overall value of less than $100,000, then usually the recipients under your will might follow a statutory treatment to effect the transfer of those possessions pursuant to your will, subject to your debts and expenditures, without an official court-supervised probate administration.
A probate has advantages and disadvantages. The probate court is accustomed to resolving disputes about the circulation of your possessions in a fairly expeditious fashion and in accordance with specified guidelines. In addition, you are guaranteed that the actions and accountings of your executor will be examined and approved by the probate court.
Disadvantages of a probate include its public nature; your estate strategy and the worth of your properties becomes a public record. Also, because lawyer's fees and administrator's commissions are based upon a statutory charge schedule computed upon the gross (not the net) worth of the possessions being probated, the expenses might be greater than the expenses sustained by an equivalent estate handled and distributed under a living trust. Time can likewise be a factor; typically circulations can be made pursuant to a living trust faster than in a probate proceeding.
8. TO WHOM SHOULD I LEAVE MY ASSETS?
As soon as you have identified who ought to receive your properties at your death, I can help you clarify and properly identify your recipients. For instance, it is crucial to clearly identify by right name any charitable organizations you want to attend to; numerous have similar names and in some households, individuals have comparable or even identical names.
It is likewise important for you to consider alternative distribution of your possessions in the event that your main beneficiary does not survive you.
When it comes to beneficiaries who by factor of age or other infirmity may not have the ability to manage possessions dispersed to them outright, trusts for their benefit may be developed under your will or living trust.
9. WHOM SHOULD I AS MY EXECUTOR OR TRUSTEE?
After your death, the executor of your will and the trustee of your living trust serve practically similar functions. Both are responsible for guaranteeing that your desires, as stated in your will or living trust, are implemented. Although your executor is typically based on direct court guidance, both the executor and the trustee have comparable fiduciary duties. The trustee of your living trust may assume duties under that document while you are living.
While you might function as the preliminary trustee of your living trust, if you become incapable of functioning as a trustee, the designated successor trustee will then action in to handle your properties for your benefit. An administrator or trustee might be a partner, adult children, other family members, household good friends, service associates or a professional fiduciary such as a bank.
I discuss this matter will my customers. There are a number of concerns to consider. For example, will the appointment of among your adult children trigger unnecessary tension in his or her relations with brother or sisters? What disputes of interest are created if a company partner or partner is named as your executor or trustee? Will the person called as administrator or follower trustee have the time, organizational ability and experience to do the job efficiently?
10. HOW SHOULD I PROVIDE FOR MY MINOR CHILDREN?
A minor kid is a kid under 18 years of age. If both moms and dads are deceased, a minor kid is not legally qualified under California law to take care of himself or herself. In your will, therefore, you should choose a guardian of the person of your small kids to monitor that kid and be responsible for his or her care till the child is 18 years old.
Such a nomination can avoid a "yank of war" in between well-meaning family members and others if a guardian is required.
A minor is likewise not legally qualified to handle his/her own home. Properties moved outright to a small need to be held for the minor's advantage by a guardian of the kid's estate, up until the kid obtains 18 years of age. You must nominate such a guardian in your will also. In providing for small kids in your estate plan, you ought to consider making use of a trust for the kid's benefit, to be held, administered and distributed for the kid's benefit until the kid is at least 18 years of ages or some other age as you may decide. You might likewise think about a custodian account under the California Uniform Transfers to Minors Act as an option in making particular gifts to minors.
11. WHEN DOES ESTATE PLANNING INVOLVE TAX PLANNING?
Estate taxes are enforced upon an estate which has a net worth, in 2002, of $1,000,000 or more. Under present law, that amount will increase, in irregular increments, to $3,500,000 in 2009. Estate taxes are set up to be reversed for 2010. In 2011, estate taxation will go back to the law which existed before the enactment of the 2001 tax law modifications, so that an estate which has a net value of $1,000,000 or more will be subject to 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, considerable estate taxes can be conserved by appropriate estate planning, usually before death and, when it comes to married couples, prior to the death of the first spouse. Estate preparing for taxation purposes need to consider not just estate taxes, but also earnings, present, property and generation-skipping taxes also. Certified 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 possessions is a vital consider the estate read more planning procedure. Prior to you alter title to an asset, you ought to understand the tax and other repercussions of any suggested modification. I will have the ability to encourage you about such matters.
Neighborhood home and different home.
If you are wed, properties made by either you or your partner while married and while a citizen of California are neighborhood residential or commercial property. On the other hand, a married individual may own separate home as an outcome of possessions owned prior to marriage or received by present or inheritance during marriage. There are substantial tax considerations which need to be addressed in the estate planning procedure with regard to both community home and different residential or commercial property. There are also substantial home interests to think about.
Separate property can be "transmuted" (that is, altered) to neighborhood residential or commercial property by a written agreement signed by both partners and drafted in conformity with California law.
It is important to look for proficient legal advice when identifying what character your property is and how the residential or commercial property should be titled.
Joint Tenancy Property.
Regardless of its source, if a residential or commercial property is held in joint occupancy, it will pass to the enduring joint renter by operation of law upon the death of the first joint tenant. On the other hand, residential or commercial property held as community property or as occupants in common, will go through the will of a departed owner.
13. WHAT ARE OTHER METHODS OF LEAVING PROPERTY?
A number of properties are moved at death by beneficiary designation, such as:.
* Life insurance profits.
* Qualified or non-qualified retirement strategies, including 401( k) strategies and IRAs.
* Certain "trustee" bank accounts.
* "Transfer on death" (or "TOD") securities accounts.
* "Pay on death" (or "POD") possessions, a typical title on U.S. Savings bonds.
These recipient designations need to be carefully collaborated with your general estate strategy. Your will does not govern the circulation 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 proceeding might be required if you end up being incapacitated.
Conservatorships are proceedings which allow the court to designate the individual responsible for your care and for the management of your estate if you are not able to do so yourself.
You should, for that reason, select the individual or persons you want to care for you and your estate on the occasion that you end up being incapable of managing your properties or offering your own care.
With regard to the management of your possessions, the trustee of your living trust will supply the necessary management of those possessions kept in trust. However, to deal with possessions which may not have been transferred to your living trust prior to your inability or which you might receive after incapacity, a long lasting power of attorney for home management should be considered. In such a power, you designate another individual (the "attorney-in-fact") to make home management decisions in your place. The attorney-in-fact handles your properties and functions much as a conservator of your estate would operate, but without court supervision. The authority of the attorney-in-fact to manage your possessions 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 may also include declarations of wishes concerning such matters as life sustaining treatment and other healthcare issues and instructions worrying organ contribution, personality of remains and your funeral service.
15. WHO SHOULD HELP ME WITH MY ESTATE PLANNING DOCUMENTS?
Can I Do It Myself?
Wills and trusts are legal files which need to be prepared just by a certified lawyer. You need to watch out for companies or workplaces who are staffed by non-lawyer workers and who promote "one size fits all" living trusts or living trust sets. An estate plan created by somebody who is not a qualified lawyer can have enormous and costly consequences for your estate and may not accomplish your objectives and goals. However, numerous other specialists and service agents may become associated with the estate planning procedure. For instance, licensed public accountants, life insurance coverage sales representatives, bank trust officers, monetary planners, personnel supervisors and pension experts often take part in the state planing process. Within their locations of competence, these experts can assist in planning your estate.
16. WHAT ARE COSTS INVOLVED IN ESTATE PLANNING?
The expenses of estate planning depend on your specific scenarios and the complexity of documentation and planning needed to achieve your objectives and goals. The costs typically will include my charges for putting your monetary details into my computerized estate planning program which enables me to graphically reveal you the results of alternate strategies, discussing your estate strategy with you and for preparing your will, trust contract or other legal files which you might require.