What is an estate?

An estate consists of everything that you own upon ones death. (real property, cash, belongings, life insurance, stuff, IRAs, 401ks, etc.)

Isn’t an estate plan only for the rich?

No.  As a matter of fact often times people who don’t have a lot of money need an estate plan more than those who do have a lot of money, for the simple reason that not having an estate plan can cost your heirs a hefty amount.  Having an estate plan in place is one of the most financially-sound decisions a person can make.

Can an estate plan help reduce taxes on my estate?

Yes. A good estate plan gives the maximum allowed by law to your beneficiaries and the minimum to the tax. Especially since the law passed at the end of 2010 modifies the estate, gift and generation-skipping transfer taxes (GST) including a 35% top rate and a $5,000,000 exemption.

What happens if you die without a will?

If you die intestate (without a will), your state’s laws of descent and distribution will determine who receives your property by default. These laws vary from state to state, but typically the distribution would be to your spouse and children, or if none, to other family members. A state’s plan often reflects the legislature’s guess as to how most people would dispose of their estates and builds in protections for certain beneficiaries, particularly minor children. That plan may or may not reflect your actual wishes, and some of the built-in protections may not be necessary in a harmonious family setting. A will allows you to alter the state’s default plan to suit your personal preferences.

What if I have a domestic partner?

It is just as important – if not more important – to have an estate plan if you have a domestic partner.  There are ways to plan your estate as a member of the GLBT community that will give you almost all of the same rights as a married couple that aren’t afforded to you without a plan in place.

This is only for people with kids, right?

While it’s true that it’s very important to have an estate plan if you have children, thinking that not having children is a reason to forgo having an estate plan is incorrect.  As a single person – or even a married couple without children – not having an estate plan can cause many problems for your surviving loved ones.  Often times without an estate plan, there is confusion, ambiguity or even upset as to what your true wishes were.  We recommend that everyone have one in place for the peace of mind it provides all involved.

When should I plan my estate?

It is best not to procrastinate.   We suggest you begin your plan long before you will need it; you should create your estate plan while you’re healthy. When you are still healthy and strong, you can make better decisions.  If you wait until you are under extreme stress because you are ill or have other problems, you may not make the best decisions.  Sometimes, if you wait until you are very sick, a will can be legally challenged.  If you begin your plan now, you will be able to make simple changes to it as your assets increase and your circumstances change.  Take the time now to set up your estate plan; it will take only a few hours, and you will have the peace of mind knowing you are covered in case of an unexpected emergency.

How do I know if my will is valid?

The maker of the will, known as the testator, must be at least 18 years old and be of sound mind, or mentally competent to make a will.  This test of testamentary capacity is met if the individual is able to understand the nature of the act of making a will, appreciates the extent of his or her estate, and knows the family members and others whose interests will be affected by the will.

Also, the will must be signed by the testator or by another person in the presence of the testator at the testator’s direction.  It must also be signed by two witnesses at the same time who witness the testator’s signing or the testator’s acknowledgement of the signature.

A holographic will is a handwritten will that is not witnessed.  Ideally, the will is also signed and dated by the testator.

What is an estate plan?

It is a planning procedure that determines how someone’s assets, also known as their estate, will be distributed after that person dies. It might be as simple as signing a will, or it might be more complicated with living trusts, charitable remainder trusts, life insurance trusts, and other methods of avoiding probate and reducing taxes after death.

What will happen to my assets if I die without a will or living trust? Why do I need a plan?

Many people do not have a will, trust, or estate plan. They believe that when they die their estate will be distributed to their children and/or spouse in the manner that they would have desired.  Unfortunately, for those who do not have a will or estate plan, California has its own process.  The California laws that govern your estate may leave your children, spouse, or domestic partner with much less or much more than you wish for them to receive.

In addition, a guardianship of the estate will generally have to be set up to control any amounts that are left directly to your children (even if one parent is still living).

The naming of a guardian of the estate (someone to safeguard the children’s property) by a court is a procedure that may delay the timely transfer of assets to your children.  Maintaining a guardianship (for the estate) is generally an expensive procedure that requires continual filings with the court (eating away the children’s assets over time).  Lastly, the costs of probating your estate may be much higher than you would have assumed. For example, attorney’s fees and executor’s fees, which are based on the value of the gross estate, are calculated by a state mandated formula.

What I want is a simple will.  How come I should get an estate plan?

If your total estate is under $100,000, you might need only a will.  But you also might want to consider an advance health care directive and a power of attorney, both of which can make things easier for your family after your death.

On the other hand, if your estate is more than $100,000, you can avoid probate and federal estate taxes if you have an estate plan.  A simple will does not avoid probate, and won’t help to reduce federal estate taxes.

How much does an estate plan cost?

That depends on where you live and how complicated your estate plan will be.  Also, some attorneys charge a flat fee for an estate plan and some charge on an hourly basis. Before hiring an attorney you should determine how fees will be determined and approximately how much will be charged.

Why should I have a lawyer do my estate plan when I can have a paralegal or a typing service do it cheaper?

The initial cost should not be the only consideration because a poorly prepared estate plan may eventually prove to be much more costly than a properly prepared estate plan. Problems with the estate plan may not become known until after the decedent has died. It may be too late then to correct the problems. This could mean extended and costly litigation.

It breaks state law for paralegals to give legal advice. Due to the complexity of a will or trust, questions are bound to arise about the meaning of various parts of the document. Non-lawyers who attempt to answer these questions are breaking the law.

Couldn’t I just buy estate-planning software and do it myself, kind of like a Turbo Tax for estate planning?  I have estate-planning software where the will requires notarization. What does this mean?

Many people start out with software and find that they are too complicated.  Some times these people say that although you might learn something from the software, they had not learned enough to proceed and be sure they had created a good document.  Many thought this might lead to lawsuits and higher taxes after they had died.

In answer to your second question, some software says it is for use in all 50 states. In some states notarization is a valid means of witnessing a will. In California, however, notarization of a will is not allowed as a substitution for the two witnesses required by state law.

Why should I have an attorney work with me on an estate plan?  Shouldn’t I save money by just downloading free legal forms online?

This question is similar to the one answered above.  There are legalities in certain states that a downloadable form may not meet. Many of these companies that sell these forms are not overseen by an attorney.  When you meet with a qualified estate planner, you know that all items will be discussed, and you will receive a document that is specific to your need.

You recommend a living trust.  Isn’t my estate too small to do a living trust?

One of the main reasons to do a living trust is to avoid probate. Probate takes a considerable amount of time and can be very expensive. Probate fees are calculated on the “gross” amount of your estate. Therefore, if you own a home in California, you are most likely an excellent candidate to do a living trust. This is one of the biggest misconceptions about living trusts.

If I do a living trust, do I also need a will?

Yes. This is called a “pour-over will.” This will states that any assets you have not put into your living trust will be divided according to your instructions in your living trust. However, the downside is that those assets will have to pass through the probate court process, but at least they will go to your named beneficiaries in your living trust. This is the reason to still do a will in conjunction with your living trust.

Do I have to file a separate tax return for a living trust?

No. You continue to file your taxes as you always have prior to the creation of the trust with your social security number. Since a living trust is revocable, it does not need a separate tax identification number and it does not file a separate tax return of its own.