Estate Planning Q&A
Estate Planning, Trust and Probate Questions and Answers
1. What should my estate planning objectives be?
A. Assure that my assets are distributed as I desire.
B. Avoid the delay and expense of probate.
C. Reduce or eliminate estate (or death) taxes.
D. Authorize someone to help me if I become incapacitated or disabled.
B. Avoid the delay and expense of probate.
C. Reduce or eliminate estate (or death) taxes.
D. Authorize someone to help me if I become incapacitated or disabled.
2. What happens if I do not have an estate plan?
A. Who will manage my affairs if I become incapacitated, ill or disabled?
The court will appoint someone (who might or might not be your choice) to handle your personal and financial affairs and will then supervise the administration of your affairs, often at considerable expense to you.
B. Who will receive my assets when I die?
Your community property will be distributed:
(1) To your spouse, if you have one.
(2) If you have no spouse, to your children, if they are all living.
(3) If you have no children or grandchildren, to your parents.
(4) If your parents are not living, to your brothers, sisters, nephews and nieces.
(2) If you have no spouse, to your children, if they are all living.
(3) If you have no children or grandchildren, to your parents.
(4) If your parents are not living, to your brothers, sisters, nephews and nieces.
Your separate property (if you are single, all of your assets) held in your name alone will be distributed:
(1) If you are married and have no children, 1/2 to your spouse and 1/2 to your parents (if your parents are not living, 1/2 to your brothers, sisters, nephews and nieces).
(2) If you are married with one child, 1/2 to your spouse and 1/2 to your child.
(3) If you are married with more than one child, 1/3 to your spouse and 2/3 to your children, if all of your children are living.
(4) If you are not married, all to your children.
(5) If you have no spouse, children or grandchildren, all to your parents. If your parents are not living, to your brothers, sisters, nephews and nieces. Any joint tenancy property or pay-on-death accounts will be distributed to the other joint tenant or named beneficiary without probate.
(2) If you are married with one child, 1/2 to your spouse and 1/2 to your child.
(3) If you are married with more than one child, 1/3 to your spouse and 2/3 to your children, if all of your children are living.
(4) If you are not married, all to your children.
(5) If you have no spouse, children or grandchildren, all to your parents. If your parents are not living, to your brothers, sisters, nephews and nieces. Any joint tenancy property or pay-on-death accounts will be distributed to the other joint tenant or named beneficiary without probate.
C. Who will care for my minor child or my incapacitated spouse?
The court will appoint someone (generally, another family member) to supervise your minor child or your incapacitated spouse, often at considerable expense.
D. Will my heirs pay estate or death taxes?
(1) If you are married and die before your spouse, all of your assets can go to your spouse free of estate tax. Any of your assets that pass to other beneficiaries will be taxed, to the extent they exceed $2,000,000.00.
(2) If you are single, your assets, including assets you may have received from your deceased spouse, are taxed, to the extent they exceed $2,000,000.00.
(2) If you are single, your assets, including assets you may have received from your deceased spouse, are taxed, to the extent they exceed $2,000,000.00.
3. How Does a Will Help Me?
A. Who will manage my assets if I am incapacitated?
Your court-appointed representative. See the answer to question 2.A. above.
B. Who will receive my assets?
Your assets will be distributed according to the terms of your will.
C. Will my assets be subject to probate?
If you own assets in your name alone worth more than $100,000.00, a probate will be required to distribute your assets to your heirs.
D. Who will manage my assets?
Your named executor will act under the supervision of the probate court.
E. Will my spouse/heirs pay estate taxes?
Maybe. If the value of your estate exceeds $2,000,000.00 and is not distributed to your spouse, your estate may pay a tax.
4. How do Powers of Attorney and Advance Health Care Directives help me?
If you have prepared a Durable Power of Attorney for Asset Management and become incapacitated, the person you name can handle all of your affairs without court supervision.
If you have prepared an Advance Health Care Directive and are unable to communicate your health care wishes to your health care provider, the person you name can make health care decisions for you.
You cannot underestimate the importance of naming someone to manage your affairs if you are unable to manage your affairs yourself.
5. What are the benefits of a living trust?
A. How does my living trust help me while I am alive?
Your living trust allows you to control your assets during your lifetime, provides for the uninterrupted management of your assets if you become incapacitated and, when you die, allows for the expeditious distribution of your assets to your heirs without a court proceeding. While you are living and able, you can change the terms of the trust.
B. How is my living trust administered at my death?
(1) Your assets are distributed directly to your heirs according to the terms of your trust.
(2) Your heirs avoid the delay and expense of probate.
(3) Death taxes can generally be minimized.
(2) Your heirs avoid the delay and expense of probate.
(3) Death taxes can generally be minimized.
C. What are the advantages of my living trust?
(1) Your assets are distributed to your heirs without probate.
(2) Estate taxes can be minimized.
(3) Your assets can be efficiently administered if you become ill or incapacitated.
(4) Unlike a probate, information regarding your assets and heirs is confidential.
(2) Estate taxes can be minimized.
(3) Your assets can be efficiently administered if you become ill or incapacitated.
(4) Unlike a probate, information regarding your assets and heirs is confidential.
D. Are there any disadvantages of a living trust?
(1) Initial Cost. A trust for a single person costs about $1,500.00; a simple trust for a married couple costs about $2,000.00 - $2,500.00; and a complex trust for a married couple which includes tax planning provisions costs about $2,500.00 - $3,500.00.
In our office, our fees include the preparation and execution of the Trust Agreement, Certification of Trust, Pourover Wills, Durable Powers of Attorney for Asset Management, and Advance Health Care Directives for husband and wife, as well as the transfer of your assets to your trust.
(2) Time and Effort. We will do most of the work for you. However, you will spend some time with us describing your desires and your assets and then reviewing and signing your documents. After you sign your trust documents, you will generally need to direct your bank to put your trust name on your non-retirement accounts. We will transfer your other assets to your trust.
In our office, our fees include the preparation and execution of the Trust Agreement, Certification of Trust, Pourover Wills, Durable Powers of Attorney for Asset Management, and Advance Health Care Directives for husband and wife, as well as the transfer of your assets to your trust.
(2) Time and Effort. We will do most of the work for you. However, you will spend some time with us describing your desires and your assets and then reviewing and signing your documents. After you sign your trust documents, you will generally need to direct your bank to put your trust name on your non-retirement accounts. We will transfer your other assets to your trust.
6. How much can my estate (death) taxes be?
Net Fair Market Value of Assets
$5,300,000 (approximately)
$5,300,000+
$5,300,000+
Estate Taxes Due
-0-
52% of excess over $5,300,000
52% of excess over $5,300,000
7. How much are California probate fees?
Gross Market Value of Assets
$ 100,000
$ 200,000
$ 300,000
$ 400,000
$ 500,000
$ 600,000
$ 700,000
$ 800,000
$ 900,000
$1,000,000
$2,000,000
$3,000,000
$ 200,000
$ 300,000
$ 400,000
$ 500,000
$ 600,000
$ 700,000
$ 800,000
$ 900,000
$1,000,000
$2,000,000
$3,000,000
Statutory Probate Fees
(attorney and executor fees)*
$ 4,000
$ 7,000
$ 9,000
$ 11,000
$ 13,000
$ 15,000
$ 17,000
$ 19,000
$ 21,000
$ 23,000
$ 33,000
$43,000
$ 7,000
$ 9,000
$ 11,000
$ 13,000
$ 15,000
$ 17,000
$ 19,000
$ 21,000
$ 23,000
$ 33,000
$43,000
*These fees do not include any EXTRAORDINARY fees which the court can approve for other services rendered, including the preparation of estate tax returns, sales of real property, etc.
8. What occurs in a probate proceeding?
A simple probate consists of the following:
A. Your heirs will meet with the attorney to discuss the nature and value of your assets and how title is held and to obtain the names and addresses of your spouse and children (in certain circumstances, grandchildren and other close relatives). When the probate documents are filed with the court, the court sets a hearing date--usually about four weeks from the date of filing.
B. Your heirs will likely be asked to advance filing and publication fees, which generally are between $750.00 and $1,000.00. The minimum filing fee is $320.00, but the fee can be higher, depending on the value of your probate assets. Unless your heirs waive bond, the heir who wishes to administer your estate must purchase a bond to ensure that he or she acts properly during the administration of your estate. The bond must be renewed each year until the probate closes. The amount of the bond depends on the value of your assets and the cost can range from $400.00 to $1,700.00. After being appointed by the court, the administrator can generally reimburse the person who paid these expenses.
C. Once the administrator is appointed by the court he or she takes possession of your assets, pays your debts and the expenses of administration, arranges to prepare and file tax returns, pays the taxes and efficiently manages the assets until distribution is approved by the court. Your creditors are notified of the administration and, generally, for at least four months after the administrator is appointed, they may file their claims with the court. The administrator cannot ask the court to conclude the probate until the four months have lapsed.
D. Your administrator must keep accurate records of all receipts and disbursements. Your non-financial assets must be appraised by a probate referee. The probate referee is paid a fee based upon the value of the assets he appraises.
E. Unless all of your heirs waive a formal accounting, your administrator must formally account for all financial transactions from the date of his or her appointment.
F. Your administrator will be able to ask the court to allow the distribution of your assets to your heirs when the time for creditors to file their claims has lapsed and when all debts and expenses of administration have been paid. Under the best circumstances, this is generally at least six months from the administrator’s appointment, but can be substantially longer, especially if the administrator must sell estate assets or file an estate tax return.
G. Once the final petition is filed, the court sets a hearing date to review the administration of your assets. If all is in order, the court will authorize distribution of your assets to your heirs. The administrator must file receipts from all the heirs and pay all final expenses before the court will release the administrator from his or her duties. This closes the probate.