LEGAL SERVICES
ESTATE PLANNING
3 Reasons to Create a Living Trust
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1) AVOID PROBATE ESTATE ADMINISTRATION
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Cost: Fees Range from 5%-15% or more of Value of Gross Estate.
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Disclosure: Probate Requires Disclosure of Assets to Public Record.
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Time: Average time for Probate Administration is 18 months, or longer if complexities arise. Trust administration is significantly streamlined.
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2) CONTROL OVER BENEFICIARIES’ DISBURSEMENTS
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More flexibility than a simple will.
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Life Insurance Distributions may be spread out over time.
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Make family assets unreachable to the Creditors of a Beneficiary.
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Terms of Trust may incentivize, reward or help beneficiary attain certain accomplishments such as education, marriage, home purchase, etc.
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3) ORGANIZATION BRINGS PEACE OF MIND
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Client names who will take over the Trust when client is no longer able.
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Power of Attorney and Will assure all assets are transferred to Trust.
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Advanced Healthcare Directive created at same time as a Trust.
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Trust may continually be updated and amended during client’s lifetime.
PROBATE ADMINISTRATION
Probate is the term for a legal process in which a will or trust is reviewed to determine whether it is valid and authentic. Probate also refers to the general administering of a deceased person's will, trust, or the estate of a deceased person without a will or trust.
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After an asset-holder dies, the court appoints either an executor named in the will or trust, or an administrator (if there is no will or trust) to administer the process of probate. This involves collecting the assets of a deceased person to pay any liabilities remaining on the person's estate, and to distribute the assets of the estate to beneficiaries.
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(Published on Investopedia.com)
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The personal representative may also employ or retain tax counsel, tax
auditors, accountants, or other tax experts for the performance of any
action which such persons, respectively, may lawfully perform in the
computation, reporting, or making of tax returns, or in negotiations or
litigation which may be necessary for the final determination and
payment of taxes, and pay from the funds of the estate for such
services.
The personal representative and the attorney for the personal
representative each receive compensation based on the value of the
estate as follows:
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4% on the first $100,000.
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3% on the next $100,000.
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2% on the next $800,000.
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1% on the next $9,000,000.
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.5% on the next $15,000,000.
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For all amounts above $25,000,000, a reasonable amount to be determined by the court.
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The value of the estate is the total amount of the appraisal value of
property in the inventory, plus gains over the appraisal value on sales,
plus receipts, less losses from the appraisal value on sales, without
reference to encumbrances or other obligations on estate property.
The court may allow additional compensation for extraordinary
services by the personal representative and the attorney for the
personal representative in an amount the court determines is just and
reasonable.
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(Taken from CA Probate Code Sections 10800-10814)
TRUST ADMINISTRATION
3 Reasons to Create a Living Trust
​
1) AVOID PROBATE ESTATE ADMINISTRATION
-
Cost: Fees Range from 5%-15% or more of Value of Gross Estate.
-
Disclosure: Probate Requires Disclosure of Assets to Public Record.
-
Time: Average time for Probate Administration is 18 months, or longer if complexities arise. Trust administration is significantly streamlined.
​
2) CONTROL OVER BENEFICIARIES’ DISBURSEMENTS
-
More flexibility than a simple will.
-
Life Insurance Distributions may be spread out over time.
-
Make family assets unreachable to the Creditors of a Beneficiary.
-
Terms of Trust may incentivize, reward or help beneficiary attain certain accomplishments such as education, marriage, home purchase, etc.
​
3) ORGANIZATION BRINGS PEACE OF MIND
-
Client names who will take over the Trust when client is no longer able.
-
Power of Attorney and Will assure all assets are transferred to Trust.
-
Advanced Healthcare Directive created at same time as a Trust.
-
Trust may continually be updated and amended during client’s lifetime.
CONSERVATORSHIPS
When someone is no longer able to handle his or her own financial or personal affairs, the court can appoint an individual or professional to act on behalf of the incapacitated person. When a minor child is involved, it is generally called a guardianship. When an adult needs someone, it is called a conservatorship. However, states define these terms differently, and you need to consult an attorney in your state to determine what the laws are and how they impact your situation.
Why a Conservatorship?
When someone is no longer competent to manage his or her own affairs and is no longer able to delegate someone to do it for him/her, a conservator can make the necessary decisions. A conservatorship provides a higher degree of protection for the conservatee than other alternatives due to court oversight of the conservatee.
(Published on Family Caregiver Alliance (https://www.caregiver.org))
