Estate Planning

Estate Planning

Estate Planning

 

Estate planners owe a duty to their clients. This duty is not just to create an estate plan for the clients, but also to explain it to them in such a way that they can easily understand it.

1. Verbal explanations to lay persons of estate planning concepts and terms; and

2. Written handouts that may be given to clients after the initial interview, that will aid the client in understanding estate planning.

The public has not acted on revocable living trusts because the legal profession has not done an adequate job of simplifying this complex area into a format that is understandable. Obviously, if attorneys continue to use Latin words and confusing tax terms when they explain the advantages and the disadvantages of the trust, they will lose their clients. There is too much technical literature and not enough information on client communication.

My approach is simple and basic so that the client understands what we are trying to do. A recent survey conducted by my office of 800 homes in a nearby community (where the average home value is $500,000) showed only one half of the homes were held by the owners as trustees of their own trust. Less than 50% of the individuals in this survey had funded revocable living trusts

3. We are not getting our message across to the general public.

The following story of two famous Californians and how they planned their estate is useful in educating the public, as the public shows an interest in the lives of famous people. Bing Crosby planned his estate the smart way by achieving privacy, avoiding unnecessary delays, saving fees, avoiding a conservatorship, and saving time. John Wayne planned his estate in an inefficient way.

The choices that confronted these famous Californians, Bing Crosby and John Wayne, are the same choices that confront us and our clients. Do you want to plan your estate the smart way, the efficient way, by saving time, achieving privacy, and avoiding unnecessary expenses; or do you want to plan it the inefficient way?

The idea of the revocable living trust has been around for a long time. In fact, if the year were 1814 rather than 2014, and if you were planning your estate, you would be thinking about this exact same idea. Even back in medieval England the idea of the trust was a very flexible one that allowed individuals to avoid some harsh laws (such as the law of primogeniture – which was the exclusive right of the eldest son to inherit his father’s estate).

The trust concept is one that applies not just to the rich like the Rockefellers, the Vanderbilts, and the Du Ponts. It is just as appropriate now for the middle class because of the inflationary spiral of real estate and the confiscatory nature of death taxes and statutory probate fees.

WHAT IS ESTATE PLANNING?

For most clients, an estate plan includes a living trust, pour over wills, durable powers of attorney and advance health care directives. It also includes a schedule A to list the assets you have including real estate, bank accounts and business interests like S corporations, partnerships and LLCs. Our firm will also prepare the deeds to transfer your real estate to your trust and ensure that those deeds are properly recorded with the appropriate county recorder’s office. This is a complete package and is priced at a flat fee for peace of mind.

WHAT IS A LIVING TRUST?

A living 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. During your lifetime, you are still in charge of your assets and control them as you desire. But when you become incapacitated or die, your living trust can be activated to install your successor trustee as the person in charge of your assets to grab them, pay your debts and then distribute the remainder of the assets as you outline in your living trust. A living trust can be changed, amended and updated however you like during your lifetime and while you have capacity. A living trust is a must in California when you own a home or other real estate to avoid probate. Probate comes into play when you have a house or other real estate that is owned by a single person alone or when the second person of a married couple passes away. A will does not avoid probate. 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. There are a few types of living trusts including an A-B trust, A-B-C trust, a three way marital trust, a basic disclaimer trust and living trusts can also have carve outs for special needs beneficiaries and even create a legacy or dynasty trust for your beneficiaries. If you want to learn more about these types and which type you may need, contact us for a complimentary consultation.

WHY DO I NEED A WILL AND A LIVING TRUST?

A good attorney will draft both a living trust and a backup pour over will. The pour over will is designed to grab any asset that you acquire after you create your living trust, but you forgot to put into your living trust or you died before you could do the transfer. For example, say you win the lottery and then you die! The pour over will can grab the winnings and transfer them back into your living trust via a probate proceeding. It’s a backup. Second, the pour over will is the preferred document to nominate guardians for minor children. So if you have young children, please indicate who should have custody if something bad happens to both mom and dad.

WHAT IS A POWER OF ATTORNEY?

A power of attorney is a legal document where you indicate who should be your agent to handle your financial affairs if you are alive and not well. You can select now who should handle your checkbook, taxes and other things with a properly prepared power of attorney. A well drafted power of attorney is not two pages long with check boxes. A well drafted power of attorney should be between 18 to 30 pages long and expressly indicate all the powers that your agent has if you are alive and not well.

WHAT IS AN ADVANCE HEALTH CARE DIRECTIVE?

This is a simple document to have in place to name who should make medical decisions for you if you are unable to make your own decisions. You can indicate your preferences in here for burial and cremation. Your preferences for organ donation and any other strong feelings you may have about your own healthcare if you were not able to make your own decisions.

WHY USE THE LAW OFFICES OF W. BAILEY SMITH FOR ESTATE PLANNING?

We have over 40 years experience drafting and administering trusts. Our years of experience help us try our best to make your estate plans rigorous and withstand your wishes even in the face of a challenge. Please call (949) 756-0684 for your complimentary consultation today.