Whether you are looking to do a revocable living trust or Will, or something more advanced, Klosek Law has you covered. We are a full-service law firm that specializes in basic and advanced estate planning, trust administration, and probate in Northern California.
A typical estate plan will include a revocable living trust, power of attorney, pour-over will, and advance health care directive. Together, these estate planning documents ensure that financial and health care decisions are planned for and assets are protected.
Living trusts are ideal for someone who owns a home, or has other significant assets. The best thing about a living trust is that assets can be transferred without having to go through probate. Living trusts are revocable, meaning they can be changed and updated while someone is alive. Living trusts become irrevocable upon a person’s death, and at the time they generally cannot be modified except under special circumstances.
Whenever a person passes away with a living trust, the living trust has to be administered. Trust administration involves gathering a dead person’s assets, paying off creditors, and distributing the remaining assets to the trust beneficiaries. A typical trust administration will go smoothly, but problems can arise if, for example, an asset is not title in the name of the trust. If a home should be titled in the name of the trust, a Heggstad petition can be filed to transfer the home into the trust without having to do a full probate.
In the past, people would execute a last will and testament to transfer their assets to their intended beneficiaries upon their death. Otherwise, without a Will, a person would die intestate (i.e., someone without an estate plan), and the state would decide who received a dead person’s assets. The problem with a Will, however, is that one must go through probate court to carry out the instructions laid out in a well, and going through probate is expensive and time consuming. With the emergence of living trusts, which helps with the transfer of assets and avoids probate, Wills became outdated. For people with minimal assets, a Will may still be appropriate. Also, guardianship provisions are frequently inserted in a Will, allowing parents to designate trusted persons to take care of their minor children.
A family member or friend set up a living trust, but forgot to transfer an asset (such as a real property) into their living trust before his or her death. Uh oh! In general, even though a deceased person (commonly called a “decedent”) set up a Living Trust, if an asset is not titled in the name of the Living Trust, a full probate court proceeding for the decedent’s estate is necessary in California to transfer that asset to the beneficiaries. This is an all too common scenario. However, a probate attorney can avoid the California probate process with a Heggstad petition. To learn more about Heggstad petitions, please visit our article on Heggstad Petitions and then contact us for a free consultation.
Probate is a long court process that involves gathering a dead person’s assets, paying off creditors, and distributing what is left to heirs. Probate typically lasts 9-12 months, and is expensive due to court costs and attorney fees. People execute estate plans to avoid probate. Sometimes, a probate shortcut is available which allows someone to transfer assets without going through a lengthy probate. Common probate shortcuts include the spousal property petition (transfer of assets to the surviving spouse), and petition to determine succession to real property (transfer of a real property valued under $166,250). There are other alternative probate procedures that may be employed, depending on the facts and circumstances. If you are facing a probate situation, contact us today to see if there is a quicker and cheaper alternative.
Ancillary Estate Planning Documents
Power of Attorney (for financial decisions)
Living trusts cover certain assets (real property, cash accounts, business interests, brokerage accounts). Other assets (IRAs, 401ks, life insurance policies) are not formally titled in the name of the trust (although the trust can be designated as the beneficiary to receive the funds), and that is where the power of attorney comes into play. The person you designate as your agent/attorney-in-fact in your power of attorney can make financial decisions concerning everything that is not in the trust.
A pour-over will is not your traditional will—the purpose of the pour-over will is to ensure that all of your assets are distributed under the terms of your living trust, and to the extent an asset has been left out of your living trust, the pour-over will “pours” that asset into your trust. This is a safety net to ensure that the instructions in your revocable trust are carried out. The only issue with a pour-over will, however, is that it still must generally be probated. I say generally, because a pour-over will can be used in conjunction with other estate planning documents to build a successful Heggstad petition, which is a cost-effective and quick way to avoid a full probate.
Pour-over wills are also where people nominate guardians for their minor children, so that parents can choose who will raise their children if they were to predecease their children before they reach the age of majority.
Advance Health Care Directive (“Healthcare Power of Attorney”)
Health care decisions are covered in an advance health care directive. By way of this document, a person can make end of life decisions (prolong his/her life or “pull the plug”), decide how their remains will be disposed of (cremation vs burial), decide whether to donate organs or not, and make other health care decisions.
This document ensures that your designated agents have access to confidential health care information. Otherwise, because of HIPPA laws, a person may not have access to health care information, which could cause issues. For example, a person may need access to health care records to show that a person is unfit to be a trustee, and someone else (the successor trustee) should step into place to make decisions.
This document assigns all of your assets (not including those that have beneficiary designations or are already in the name of your trust) into your trust. The purpose of this document is to help you avoid probate. A general assignment can be used in conjunction with other estate planning documents to build a successful Heggstad petition, which is a cost-effective and quick way to avoid a full probate.
Community Property Agreement
This document can confirm that a married couple’s assets are community property or can be used to convert certain assets to community property. The benefit of having an asset considered community property has to do with income tax reasons. Assets characterized as community property can receive a double “step-up in basis” meaning capital gains are eliminated for a community property asset on the death of the first spouse and on the death of the second spouse.
Personal Property Memorandum
This document allows a person to dispose of items of tangible personal property. The beauty of this document is that a person can list assets on the memorandum and update it from time to time without having to go and update their trust as well. It offers a lot of flexibility and is very popular among clients.