National Estate Planning Awareness Week (October 18-24, 2021) is a public campaign designed to help people understand why an estate plan is essential to financial wellness for you and your loved ones. Estate planning is an often-overlooked element of financial wellness, it is estimated that over half of Americans do not have an up-to-date estate plan. Another one-third of the US does not know whether their parents have a will or trust.
Why are people skipping estate planning? Some find the topic uncomfortable to think about or discuss. Or, they might mistakenly think that wills and trusts are only for the super wealthy. But if you have any assets (ex: home, vehicle, bank accounts) or have loved ones who depend on you, it’s a good idea to have an estate plan in place.
Not only will your estate plan help ensure your loved ones are cared for long-term, but it will also help alleviate the stress that comes with dealing with logistics. This will help your loved ones have the proper space to grieve.
WHAT IS ESTATE PLANNING?
For most clients, an estate plan includes a living trust, pour-over will, durable power of attorney, and an advance health care directive. It also contains a schedule A to list the assets you have including real estate, bank accounts and business interests like S corporations, partnerships, and limited liability corporations (LLCs). Our firm will also prepare the deeds to transfer your real estate to your trust and ensure that those deeds are properly filed with the appropriate county recorder’s office.
WHAT IS A LIVING TRUST?
A living trust, sometimes called a revocable living trust, or just a revocable trust, is one component of a comprehensive estate plan. A living trust is designed to hold title to your major assets including real estate and bank accounts along with any business interests you may have. The advantage is that you do not own anything in your name because the trust owns your assets. However, during your lifetime you are still in charge of your assets and you can control them (and change their allocation) as you desire. However, should you become incapacitated or die, your living trust should be activated to install your successor trustee(s) as the person or people in charge of your trust properties to access them, pay your debts, and then distribute the remainder of the assets as you outlined in your living trust.
A living trust (unlike an irrevocable trust, which cannot be changed or canceled) can be altered, amended, and updated however you like during your lifetime and while you have the mental capacity.
There are a few variants of living trusts such as an A-B trust, A-B-C trust, a three-way marital trust, and a basic disclaimer trust. These specialized trusts can have carve-outs for special-needs beneficiaries or can create a legacy or dynasty trust for your heirs. If you would like to learn more about these variations and explore what type of trust best fits your needs, please contact us for a complimentary consultation.
WHY DO I NEED A WILL AND A LIVING TRUST?
When you own a home or other real estate in California estate, a living trust is essential if you want to avoid probate (the formal court administration of a decedent’s estate). As long as the trust owns your assets, there is no reason for probate to occur: your successor trustee can distribute the trust property according to your stated desires without having to go to a probate court to approve the distribution. If you become incompetent, the successor trustee(s) can manage the property for your benefit without having to turn to a court for conservatorship and without ongoing court supervision.
In summary, a living trust holds title to your major assets. You name who should get what when you pass away and who should be in charge to oversee this effort on your behalf.
A good attorney will draft both a living trust and a backup pour-over will. We advise a pour-over will for two reasons:
WHAT IS A POWER OF ATTORNEY?
A power of attorney is a legal document that indicates who should be your agent to handle your financial matters if you are alive and not well. You can select who should handle your checkbook, taxes and other affairs with a properly prepared power of attorney. A well-drafted power of attorney is not two pages long with checkboxes. It should be between 18 and 30 pages long and expressly indicate all the powers that your agent has if you are alive but in some way incapacitated.
WHAT IS AN ADVANCE HEALTH CARE DIRECTIVE?
The Advance Health Care Directive is an important “peace of mind” document that:
WHAT IS SCHEDULE A?
The Schedule A is a companion to your living trust to indicate what you own and what should be included in it. Think of it as an index that tells your successor trustee(s) what you have and what they should collect and distribute when you die. You can update the Schedule A at any time, and it is a good idea to revise it each time you buy or sell an asset, or if relationships with your bank, investment, or insurance companies change, for instance. You don’t want to leave money out there that a beneficiary cannot locate because they were not aware of it. Some people have a reminder set up for their birthday or on an anniversary to make sure they review the Schedule A at least annually.
WHAT IS “HIGH-NET-WORTH” ESTATE PLANNING?
If you have over ten or even twenty million in net worth, you still need the above documents. Everyone needs them as part of a basic foundational estate plan.
WHY USE TLD LAW FOR ESTATE PLANNING AND LIVING TRUSTS?
We are good at this. We have several excellent estate planning attorneys who exclusively handle estate planning and trusts for the firm’s clients. We have over 100 years’ combined experience in drafting, administering, and litigating and protecting estate plans. Our decades of involvement in this area of the law mean that we are ready to defend your wishes even in the face of a challenge.
As an added service, we can prepare deeds and record them to save you time and spare you a separate trip.
WHAT DO WE CHARGE FOR ESTATE PLANNING?
Our pricing model for estate planning is usually a flat fee, but it is also designed to address the complexity of your unique circumstances and the value of your assets. If you have estate tax planning, charitable gift plans, business, or family issues that are particularly intricate, your estate plan fee could be hourly to be the most effective. We have found that there is no one-size-fits-all in this important area of our legal practice.
The terms would be set out for you in the first meeting, for which there is no charge. If you are unsure or don’t understand how estate planning works, your best bet is to reach out to us for this complimentary consultation. Our primary concern is to make sure we communicate your family’s estate planning requirements back to you, so you understand exactly what you need and why.
Have Additional Questions? Contact TLD Law’s Estate Planning Team
Creating an estate plan may seem a little overwhelming, but one of the biggest mistakes you can make is not having a plan in place. Please contact us anytime for your complimentary estate planning or living trust consultation by calling (562) 923-0971.