Estate Planning

We strive to protect and preserve the family legacy or the family wealth. How do we do that? By educating our clients and implementing strategies that preserve wealth and benefit families, or more specifically, the client’s beneficiaries. A Key strategy to preserve wealth is to avoid expensive Probate. To do so, you need, at a minimum, a healthy mind and these estate planning documents: (1) a Revocable or Living Trust and (2) a Pour Over Will.  That may avoid Probate, but will that avoid the Courthouse? No, those documents will avoid probate court only if you die without having any physical or mental capacity problems. If you cannot handle your own financial affairs during your lifetime and you have only those two documents, your family will still have to hire a lawyer to go to court to get those notorious, expensive conservatorships. Thus, to avoid having to go to court for a conservatorship, make sure your estate plan also includes a Durable Power of Attorney for financial affairs. (If your estate is less than $150,000, you can altogether avoid probate). A good estate plan also contains other estate planning documents that bring peace of mind to you and your family.

What is a Revocable of Living Trust? Revocable trusts hold assets while you are alive and name the people who will receive the trust property after your death.  Revocable trusts are also used to avoid probate (assets in the trust are not subject to probate) and provide privacy regarding estate distribution, as trusts are not publicly filed documents. Are the assets removed from the person who creates the trust? No. The assets remain in control of the person that creates the trust. He is called a settlor or grantor of a trust and can serve as Trustee of the trust at the same time. Can a Trust be changed, amended or revoked? Yes. The person that creates the trust can change it at any time during his lifetime if he is still competent.

What is a Pour Over Will? Any assets that are outside the Revocable Trust are poured over by a Pour Over Will into the existing revocable trust at death and thereby avoid the probate process. The distribution of those assets is governed by the distribution provisions of the existing revocable trust. Often the person who creates the revocable trust will acquire property or other assets and forget to put them in the name of the existing revocable trust. Hence, the pour over Will is required.

What is a Durable Power of Attorney? This estate planning document appoints a trusted family member, friend, or advisor as your agent to make financial decisions on your behalf if you become physically or mentally unable to do so. A durable power of attorney (DPOA) operates over assets in your sole name. When is a DPOA effective? It can be effective the moment the document is executed, or it can be drafted to come into effect upon the occurrence of a specific event such as incapacity. The authority of your agent terminates at your death. Can a DPOA be changed, amended or revoked? Yes. that can be done to the DPOA at any time during life while the principal is competent.

Retirement Plans, IRAs and Life Insurance-What are Beneficiary Designations? They direct the payment of your retirement plans and life insurance to the beneficiaries you have named. Forms usually provide for a primary beneficiary and a contingent beneficiary. The retirement assets will, and life insurance may, be included in your estate for estate tax purposes. This is only important if your estate is valued at over $11 million dollars per spouse. Because of the unlimited marital deduction, there is NO tax upon the death of the first spouse.

What is an Advance Health Care Directive? It provides specific wishes about certain aspects of end-of-life- care, rather than leaving them to your healthcare agent to determine. Can it be changed? Yes. at any time during life while the principal is competent.

PROBATE

What is Probate? Probate is the legal process of transferring of decedent’s estate to heirs and the process through which any debt owed to creditors is paid off. Probate administration is under court supervision and requires a court hearing that could include disputed contests, beginning with who is to be appointed the personal representative (PR) of the estate. Our office generally represents personal representatives who are appointed by the Court. We will explore ways to avoid full blown probate proceedings through the use of a Spousal Property Petition, Small Estate Procedure or Affidavit. In select cases, we will engage in litigation to contest or defend the validity of the Will.

Is a bond required? Usually, a bond is required to be posted unless it is waived by all of the heirs or all of the beneficiaries. Publication in the local newspaper has to inform the world that the PR intends to administer the estate of the decedent.

Letters of Administration are then granted by the court to the PR who has the duty to inventory and appraise all the personal and real property and determine and pay all the debts of the decedent. Notice has to be given to the creditors. An accounting is required to be filed with the court before final distribution. Compensation to the PR and the attorney is set by law and cannot be changed. As a result, probate fees are much more expensive than estate planning fees.

Estate taxes are no longer relevant for most people and the benefits of estate planning outweigh those of probate most of the time. We do not do one-size-fits-all estate planning, and we do not recommend them because they lead to expensive trust litigation, even though forms may be readily obtainable on the internet. An experienced counselor-at-law should listen to your unique circumstances and implement your estate plan. If no estate planning was done, we would be able to  handle the probate for your family and go to Probate court.

Call Hector C. Perez & Associates at 562.799.5524 to schedule your confidential consultation.