Monday, April 1st, 2013

Some quick questions and answers regarding wills, living trusts, Probate and Estate Planning from The Law Office of Mark J. Lamb (916) 485-2593.

 

1.     Do I need to use an estate planning attorney if my estate is small?

 

The short answer is yes.  What did you expect me to say?  All people have stuff: homes, cars, bank accounts, investments, collections, junk, and if you want to leave those things to certain persons or groups, you have to put your wishes in writing.  An estate planning attorney can make sure you do it correctly so as not to burden the people you leave behind with unnecessary costs, fees and headaches.  I offer a free consultation where I can answer your questions and let you know what your options are.

 

2.     What problems arise when people have not done proper estate planning?

 

I believe the most common problem is that the property and assets you want to go certain beneficiaries quickly get bogged down in administrative problems like probate court proceeding or held up by family members who don’t have direction on how to transfer assets properly.

 

3.     What’s probate?  How much does it cost?

 

When a person passes away with assets in their name, and they have prepared a will, the person nominated Executor must file the will with the local Probate Court and begin the administration of the deceased person’s estate.  This requires hiring an attorney like myself and having the Court oversee the distribution of the persons assets to the beneficiaries named in the will.   The executor must be approved by the Court before they are allowed to do things like pay debts and close bank accounts. Probate is not a bad thing, but it usually takes seven to twelve months to complete and can cost tens of thousands of dollars in court costs and fees.  For example, and estate consisting of $400,000 of gross (not net) assets will incur fees and costs of approximately $20,000.

 

4.     How does a living trust avoid probate?

 

When a person creates a living trust, which is just a contract that outlines where the assets they have transferred into their trust will be distributed when they pass, they name themselves as the trustee.  When that original trustee passes away then name another person to be their successor trustee.  That person is like the executor of a will.  However they need not go to the Probate Court to have the power to pay bills and close accounts.  This is because the assets in the trust are still in the trust, and we have simply changed from one trustee to another.  However, the new trustee must follow the instruction in the trust and distribute the trust assets as outlined.

 

5.     Must you transfer title to all of your assets into your living trust?

 

No.  Any asset that already has a beneficiary named, like life insurance or an IRA account will not go into the trust.  But for some people, their trust will be the named beneficiary of their life insurance or IRA account.  This is where an estate planning attorney can guide you on the proper way to transfer assets for your particular situation.

 

6.     If I have a trust, do I have to treat my children equally?

 

No.  There is no law that says your children must all receive the same amount of assets.  Often children are in different stages in life, or are successful in different ways.  Some kids have greater needs than others, and some kids have already received their inheritance in advance through loans that may or may not ever be paid back.  An estate planning attorney can help you draft a distribution that is fair for your family situation.

 

7.     What are some of the more difficult decisions people have to make when putting together a living trust?

 

For people with young children, choosing a guardian can be very difficult.  For all clients choosing who will be the successor Trustee is a very important decision.  It may not be a hard choice, many people simply choose their oldest child, but it requires some serious contemplation.

 

8.     What’s that document where you say you want to pull the plug?

 

That document is called a living will.  It is included in all Living Trust Packages and is attached to the Advance Health Care Directive.  The Advance Health Care Directive names the person(s) who you have chosen to make medical decisions for you if you are unable to make those decisions for yourself because of incapacitation.

 

9.     When a celebrity dies their estates seem to be in the court system for years, why?

 

Sometimes it’s poor planning like in the case of Anna Nicole Smith.  Other times it’s because there is a lot of money at stake and if one beneficiary has an attorney it starts a chain reaction whereby all the beneficiaries think they need representation too.  And does anything happen quickly when a lot of attorneys are working and getting paid?

 

10.    Can you update a will or trust drafted by another attorney?

 

Yes.  I do it all the time.  I don’t charge to have a person come in and show me their trust documents.  Once I know what changes a person wants to make I can give an estimate of the cost to do so.

 

11.       How much does a trust cost?  How long does it take to prepare?

 

A trust package:  Living Trust, Pour over Will, Advance Health Care Directive, Living Will, General Durable Powers of Attorney, and Trust Transfer Deeds usually takes a couple of weeks to prepare.  There is a flat fee for Living Trust Packages:  $1,500 for a single person and $2,000 for a married couple.  Getting started requires simply calling for a free consultation at (916) 485-2593.

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