1. What is an estate plan?
An estate plan generally includes a will along with other documents working together to help maximize your control of the distribution of your assets, while minimizing taxes and strain on your family. It is a statement of what you want to happen to your family, your assets and your remains once you are gone.
2. Does everyone need an estate plan (are there other ways)?
Most people do need some type of estate plan, even if it is to help select someone to help put your affairs in order. No, not everyone needs a complicated estate plan, but everyone can benefit from it. To determine if an estate plan is right for you, KC will review your goals and help identify which estate plan or legal documents will satisfy your needs.
3. What happens if I do not have an estate plan?
If you do not have any estate planning then your family will most likely need to probate your estate. Probate is the legal process in which the state designates your estate based upon the laws of California. Probate often is expensive, complicated and time-consuming process. Absence of an estate plan also allows the government to determine where your assets go, in a process known as intestate succession.
4. What is Intestate Succession?
If you die without a will, then you are said to have died intestate. The rules of intestate succession are basically a default pecking order of who gets your assets. It is the same scheme for every person, but obviously everyone has a different family picture of who is important in his or her lives.
5. What documents are included in an estate plan?
Estate plans most often consist of a trust, will and often power of attorneys or living wills. An estate plan also helps to coordinate retirement funds, IRA's, beneficiary designations on bank accounts and life insurance policies.
6. What is a Will?
A will is a legal document that outlines your wishes of asset distribution, guardianship preferences of your minor children and often your final plans. It also nominates an executor, the person in charge of carrying out your wishes, and determines how much discretion they will have.
7. What is the California Statutory Will Act?
This is an act passed by the California legislature to simplify the drafting of wills. The idea was to make drafting a will an easy process, because the law provides a fill-in-the-blank style form that the court will treat as valid.
8. What is a Holographic will?
A holographic will is not legal in most states, but California does allow them. They are informal wills in which the material terms must be all done in the testator's own handwriting, and must be signed by the testator. No witnesses are required. KC does not recommend the use of holographic will.
9. What is a Trust?
A trust is a separate legal entity that holds and manages property on your behalf and distributes assets upon your death. Trusts are a private tool that people use to avoid a public probate. There are several types of trusts with a multitude of provisions, depending on the goals of the client.
10. What are Durable Power Documents?
Durable power documents, such as a Durable Health Care Power of Attorney allow you to designate a party to communicate your express wishes. Durable power documents are often included in estate plans.
11. What type Trust is right for me?
There are several types of trusts, depending on the client's goals. KC is well versed in all manner of trusts, and will meet with you and help you decide which trust is correct for you. It really depends on what your goals are.
12. What is probate and why would I want to avoid it?
Probate is the court-supervised process by which your assets are gathered up and inventoried, any debts you have are paid, and any remaining assets are distributed. Most people want to avoid it because it is expensive, time consuming and public.
13. How expensive is Probate?
The very short answer - estimate about 8% of your estate. Probate consists of court fees, fees for the attorney and fees for the executor. The attorney fees and executor fees are fixed by California law, which generally provides for a graduated fee depending upon the size of the gross estate.
14. How long does Probate take to complete?
Each estate is different. Creditors have a minimum of four months to file creditor claims once the probate petition is filed. In our experience, a very fast probate takes eight months, assuming the assets are fairly well organized and there are no challenges. Larger estates always take longer, up to several years.
15. Do the Probate records become a matter of public record?
Yes, everything filed with the probate court is openly accessible to anyone wishing to view it. This will include a copy of your will, along with an inventory and appraisal of all the probate estates assets and debts. A trust, however, avoids probate and remains confidential as long as no one contests or otherwise challenges the terms of the trust.
16. How does an estate plan effect taxes?
In addition to your annual tax return, when you die you are subject to the Federal Estate Gift Tax. This is a rapidly changing area of law, but currently only a concern for very wealthy people. KC will identify if your estate might be subject to this tax, and will provide multiple strategies to avoid or reduce your tax burden.
17. How can estate planning help me set aside funds for my children?
Having children is a very important reason to do some estate planning. Without it, the money will be given to a guardian for their benefit and the child will receive it outright at age 18. Many people feel it is wiser to delay distribution until the child is older, or to spread out the distribution more evenly over time.
18. How can Estate Planning help my beneficiaries avoid confrontation?
There are many ways an estate plan can help avoid confrontation and/or litigation over the distribution of the assets. Making effective use of will substitutes such as living trust, videotaping the execution of the documents, preparing a letter of explanation for the testator's motivation behind the particular distribution scheme chosen, having your medical doctor perform a competency exam just prior to execution of the documents, etc.
19. How can Estate Planning protect my assets from creditors?
Depending on the goals of the client and the nature of the creditors, many types of trust, usually irrevocable in nature, can be created to protect the transferred assets from creditors either of yourself or your intended beneficiary.
20. Can I create a trust to help support other members of my family?
Yes, there are Support Trusts used to provide for the care of another, most often a parent or spouse, and Special Needs Trusts used to provide care for minor and adult children with disabilities. These types of trusts are highly specialized.
21. What assets are managed by the estate plan?
To make the most effective estate plan possible, all your assets and debts must be considered, both past and future outlook. Different assets work differently, some will be governed by a trust, some by a will, and some by other will substitutes. To simply sell someone a single document without looking at the entire picture is a huge disservice.
22. Who should I select to be my Executor or Trustee?
This is an important decision. Sometimes it is best to nominate a family member, but in other instances professionals are better suited. The most important characteristic is someone you trust, and as long as they have basic financial skills that is generally fine.
23. Should I agree to serve as an Executor or Trustee?
It is up to you, but make sure you know what you are getting into. An Executor or Trustee is generally compensated for their time and effort, but if you make mistakes, you may be held personally liable. If you do agree to serve in this role, having a competent attorney is absolutely necessary.
24. What if there are changes after the estate plan has been drafted?
Most estate planning documents are revocable and can be easily changed. Many law firms charge large fees for any further changes, however, KC maintains your client files perpetually, and never re-bills for work already performed. Most changes can be made in just a few minutes, and that is all you will be billed for.
25. How can I challenge the validity of another's estate plan?
There are a few basic ways for challenging any particular document, but they generally fall into three categories: 1) lack of capacity - meaning you did not have a mental capability to make the will in the first place, 2) undue influence - meaning the estate plan is a reflection of another person's wishes, not yours, and finally3) fraud - meaning someone tricked you into executing the estate plan.
26. Where should I keep the estate plan documents?
Any safe place where you keep important papers is fine, other than in your bank's safe deposit box. A safe deposit box is bad because your bank will seal this until they get a court order. KC is happy to maintain your original estate planning documents free of charge for life.
27. Who should know about the estate plan?
It is important that your Executor and/or Trustee along with the backup person know and have a copy of these documents. It is often a good idea to tell these people where you keep the original documents as well.
28. What needs to happen when a loved one passes away?
Death can take a tremendous toll on a family. In addition to the emotional turmoil, survivors must deal with a number of financial and tax issues, some of them mundane and some quite complex. KC provides care and guidance to ease your stress and confusion during probate and estate administration.