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Jack Friedell
In Estate Planning, Probate, Trust, Uncategorized, Will

Six reasons a Living Trust is superior to a Will in California.

Estate Planning 101: Living Trust versus a Will in California

Most people believe that a Will is all that is needed in order to pass on the assets in their estate. However, what most people fail to realize is that a Will is not going to be a sufficient California Estate Planning tool. That is because a Will comes up short in several key respects when compared to a Living Trust (also known as a Revocable Trust or Inter Vivos Trust).

Six reasons a Living Trust is superior to a Will in California.

1. A Trust avoids probate whereas a Will still goes through probate court.

A Will is simply a road map for the Probate Court to follow. A Will does not avoid probate; it simply directs the Probate Court judge on how you want your assets distributed upon your death. The judge will follow your wishes in your Will but your estate will still be on the hook for all probate related fees (such as attorney fees, CPA fees, appraisal fees, etc…). The total fees for the probate of an estate in California can be as high as 5-6% of the total value of the estate.

However, a Living Trust, set up by an experienced California Trust Attorney, avoids the entire probate process. That means the bulk of the assets will pass without any fees to the intended beneficiaries. It also means that there is no court involvement. Therefore, the value of a Living Trust is that it avoids probate fees and probate court. The small cost involved in setting up a properly funded Living Trust compared to the total savings a Trust provides by avoiding Probate is substantial.

2. A Trust can hold beneficiary assets whereas assets pass at age 18 with a Will

A Trust can be designed so that the assets pass to beneficiaries at a desired age. For example, a Trust can have language in it that gives 25% to a child upon completion of college, another 25% upon reaching age 25, with the remaining 50% at age 30. This allows a beneficiary to receive their inheritance in small chunks instead of in a bulk sum. Perhaps the beneficiary will have blown through the initial 25% and will be more disciplined in how they spend the next 25%.

However, with a Will, the beneficiary receives everything at age 18. That means a financially inexperienced teenager will receive their entire portion of the estate at 18. This can cause a lot of problems, including the beneficiary blowing through their entire inheritance.

3. California Trust Administration vs. California Probate

A typical California Trust Administration can take around three to nine months. That is assuming the Trust was created by an experienced California Trust Lawyer (some trust administrations can take a lot longer depending on the quality of the trust).

A typical California Probate can take anywhere from nine to eighteen months. Some more complicated probates can take years.

The bottom line is that the beneficiaries will receive their assets much quicker via a Trust than a Will.

4. A Living Trust is private whereas a Will is public

A Will is open to the public. In fact, notice of the decedent’s passing must be given to every beneficiary named in the Will and to every beneficiary who would have received had the deceased died intestate (without a Will). Further, anyone can access the probate court documents. There is absolutely no privacy with a California Probate.

A Trust is completely private. Notice of the decedent’s passing is given only to the heirs of the Living Trust. There is no court supervision, no court interaction and no public disclosure.

5. A Living Trust is harder to contest than a Will

Since a Will is open to the public and since notice is given to all named beneficiaries and to every beneficiary who would have received had the deceased died intestate, there is a much greater chance for a Contest by any potential heir who was left out of the Will.

However, due to the private nature of a Trust, there are very few parties involved. Therefore, there is less likelihood that anyone will Contest the Living Trust.

It is highly beneficial to avoid a California Will or Trust Contest because of the high cost associated with a Contest. Often, the cost of defending the Will or Trust Contest comes straight out of the assets of the estate, depleting the estate’s assets.

6. A Trust avoids court involvement at incapacity

In California, if a person becomes incapacitated, typically a member of the family petitions the Probate Court for a Conservatorship. This applies whether the incapacitated person has a Will or not. Then the Court decides who the appropriate Conservator will be.

A properly created Living Trust will list a Successor Trustee (as well as one or two backups). The Successor Trustee will take over for the Trustor upon the Trustor’s incapacity. There is no court involvement and the Trustor gets to choose the person and not the court.

One final note: a Will is still necessary when creating an estate plan. The Trust will hold all of the assets in the estate. However, every good Trust needs a “Pour Over Will” to grab any assets outside of the Trust and “pour” the assets back into the Living Trust. An experienced California estate planning lawyer will almost always recommend a Will to compliment a Living Trust.

In summary, the small price involved in setting up a California Revocable Trust far outweighs the time and money saved by avoiding probate. For questions on the above content or for any other legal advice dealing with California Living Trusts, an experienced North County San Diego will and trust attorney can help. Please contact the Law Offices of Jack B. Friedell today.

The authors, publisher and host are not providing legal, accounting, or specific advice to your situation. 

Jack Friedell
In Spendthrift Provision, Uncategorized

The value of a Spendthrift Provision in your Living Trust

Using a Spendthrift Clause in a Living Trust

Brought to you by the Law Offices of Jack B. Friedell.

A common estate planning 101 question we receive from clients is how a Settlor (the person creating the trust) can protect a beneficiary’s inheritance from creditors. Typically, this question comes up because the Settlor of the trust is leaving monies to a beneficiary that he or she knows has problems when it comes to finances. The good news is a spendthrift trust can help protect a beneficiary’s inheritance and keep creditors at bay.

California Probate Code § 15300

To summarize California Probate Code § 15300 in part: if there is no language in the trust that makes for a voluntary or involuntary transfer of a beneficiary’s interest, then the beneficiary’s income interest does not have to be transferred and cannot be touched by a creditor for a money judgment until the income is actually paid to the beneficiary.

Basically, a creditor cannot attach a judgment to the assets of a trust due to a beneficiary until the assets have actually been distributed to the beneficiary.

The advantage to the beneficiary protected by the spendthrift provision is that he or she can protect their inheritance from creditors. Granted, the beneficiary must be careful on how he or she takes their distribution from the trust assets, but at least the creditor cannot get a lump sum judgment and deplete the beneficiary’s entire inheritance.

Why might someone consider providing a spendthrift provision in their trust?

The most common reasons for providing the provision are for the following type of beneficiary:

  • The Squanderer: The beneficiary has poor money management skills
  • The Addict: The beneficiary has an addiction to drugs or alcohol
  • The Gambler: The beneficiary has a gambling addiction
  • The Consumer: The beneficiary has a propensity to acquire large amounts of debt
  • The Used and Abused: The beneficiary has a history of being taken advantage of by friends and family

Each of these beneficiaries has one thing in common—they and money are soon parted. If you are having an attorney create a trust for you, it is in yours and your beneficiary’s best interest to include a spendthrift provision in your trust. Then the trustee can make distributions as the trustee deems prudent. This will protect your beneficiary in the short term and perhaps help buy your beneficiary some time to allow them to learn a valuable lesson about the importance of good money management.

Exceptions to spendthrift provisions

There are exceptions to the spendthrift clause in a trust document. The most common reasons a spendthrift provision in a living trust will not be followed is due to either:

  1. Creditors who provide the beneficiary with necessaries, such as food and shelter
  2. Children and ex-spouses for child support and spousal support payments

In Conclusion

The bottom line is, whether your beneficiaries fall into any of the above categories or not, it is prudent to include a spendthrift provision in your living trust. It will not detract from the value of your trust and it could very well protect a beneficiary down the road. Life is unpredictable. Therefore, it is better to be safe than sorry.

For questions on the above content or for any other legal advice dealing with spendthrift trusts, an experienced California trust attorney can help. Please contact the Law Offices of Jack B. Friedell today.

The authors, publisher and host are not providing legal, accounting, or specific advice to your situation.

Jack Friedell
In Estate Planning, Uncategorized

Need help paying for your estate plan?

Using monthly payments to pursue a top level estate plan.

At the Law Offices of Jack B. Friedell, we understand that many potential clients avoid pursuing a proper estate plan due to other financial commitments. As a result, many potential clients do not have the proper documents needed in case of an unexpected death or incapacity. Therefore, we offer our clients the option of paying for their estate plan with monthly installments. If you are interested in our services and prefer to pay via a monthly payment plan please let us know. We will be happy to work with you. Our goal is to provide our clients with the highest level of quality and service at a competitive price.

For questions on the above content or for any other legal advice dealing with developing an estate plan in California, a California estate planning attorney can help. Please contact the Law Offices of Jack B. Friedell today.

The authors, publisher and host are not providing legal, accounting, or specific advice to your situation.

Jack Friedell
In Estate Planning, Trust, Uncategorized

Assets to include in a living trust

When creating an estate plan it is important to have a breakdown of the client’s assets. The following article lists the most common assets that a client owns, with a brief description of each asset. By identifying the assets a client owns, we can better assist our clients in creating an estate plan that meets our clients’ needs and goals.

 

Estate Planning 101: The most common assets are:

Real Property

Real property includes any and all land owned by the client. Some common examples of real property are single family homes, condominiums, town homes, vacation homes, rental properties, farmland, and commercial property. Titling the property in the name of the living trust protects the real property asset from having to go through probate. Of course, whether the beneficiary then decides to then add any of these properties to the listings of Montana ranches for sale out there, for example, is their decision, but at least they then stand to gain from the sale.

Personal Property

Personal property encompasses various movable assets including art, furniture, clothing, and jewelry. A detailed list of a client’s personal property is not necessary. However, clients may wish certain valuable items to be distributed to particular beneficiaries. For example, a grandma may wish for her wedding ring to pass to her granddaughter. An assignment of personal property can be added to an estate plan in order to declare the Trustor’s intention that all of the Trustor’s personal property be included in the living trust.

Intangible or Intellectual Property

Intangible property includes trademarks, patents, and copyrights. It is a good idea to have your intellectual property properly valued through the use of a valuation expert.

Automobiles

We recommend valuable cars, including motor homes, be put into the living trust. However, for typical automobiles under $50,000, a pour over will can grab the asset upon your death and place it into the trust.

Bank Accounts

Making a list of all of your bank accounts and the total assets in each is a great way to help your estate planning attorney. Some of the bank accounts may need to name the trust as the beneficiary. However, maintaining a personal or joint account for a smaller bank account that is used for day to day items tends to make life easier.

Stocks, Mutual Funds, and Bonds

Most clients own stock and/or mutual funds. You may also own bonds, such as municipal bonds or U.S. Treasury Bonds. Your estate planning lawyer will need to know what company you use to invest with.

Life Insurance

Your living trust attorney would need to know what type of life insurance policy you own and what the face amount of the policy is. The most common types of life insurance are term, whole, and universal life. Typically, the Trustor’s spouse is named as the beneficiary with the trust named as the contingent beneficiary.

Annuities

Your trust lawyer will want to know if you receive a fixed payment from an annuity and what company or organization the annuity is through.

Retirement Accounts

Your estate planning lawyer will need to know what company your retirement accounts are currently with. Retirement accounts include traditional IRAs, Roth IRAs, pensions, and 401(k)s. Typically, the Trustor’s spouse is named as the beneficiary with the trust named as the contingent beneficiary.

Businesses

Your trust lawyer will need to know if you have an interest in a business, such as a sole proprietorship, a corporation, or a limited liability company.

For questions on the above content or for any other legal advice dealing with California living trusts, an experienced California trust lawyer can help. Please contact the Law Offices of Jack B. Friedell today.

The authors, publisher and host are not providing legal, accounting, or specific advice to your situation.

Jack Friedell
In Advance Healthcare Directive, Estate Planning, Pour Over Will, Power of Attorney, Quitclaim Deed, Trust, Uncategorized, Will

Estate Planning 101: What does a typical estate plan include?

Estate Planning FAQ: What an Estate Plan from the Law Offices of Jack B. Friedell Includes.

Brought to you by the Law Offices of Jack B. Friedell.

Not all estate plans are equal. A typical California estate plan drafted by the Law Offices of Jack B. Friedell will include:

Living Trust
Last Will and Testament (pour over will)
Durable Power of Attorney
Advance Healthcare Directive
Assignment of Personal Property
Certificate of Trust
Declaration of Trust
Quitclaim Deed
Estate Organizer

A living trust in California will help keep your assets with your beneficiaries and away from the probate court.

A Will, also known as a pour over will, lets everyone know that you intend for all your assets to pour into your living trust.

A power of attorney will allow your agent to manage your financial affairs if you become incapacitated. Most importantly, it will allow your spouse to continue to make gifts or to move assets around to ensure that you qualify for medicare or Medi-Cal.

Your advance health care directive, or living will, takes care of your end of life decisions so those you love do not have to make the hard end of life decisions for you.

An assignment of personal property lets the world know that you intend for all your non-titled assets to flow into your trust.

A declaration of trust declares to the world that you intend that all your assets are to be trust assets. This is a great tool to protect your estate from a potential probate and bring property or assets into your trust that were left out during your life.

A quitclaim deed is simply a form that your estate planning attorney fills out on your behalf to place any real property into your trust.

Finally, an estate plan organizer keeps all your pertinent files together so that your trustee can locate everyone and everything necessary to properly administer your estate. Plus, funding instructions are included to make sure all your assets are properly titled and place into your trust.

For questions on the above content or for any other legal advice dealing with estate planning in California, a California estate planning lawyer can help. Please contact the Law Offices of Jack B. Friedell today.

The authors, publisher and host are not providing legal, accounting, or specific advice to your situation.

Jack Friedell
In Estate Planning, Executor, Grantor, Settlor, Trust, Trustee, Uncategorized, Will

Original estate planning documents

Does your trustee or executor know where your original estate planning documents are? Keep your contact information up to date.

Written by the Law Offices of Jack B. Friedell.

We recently took over the practice of another attorney. One of the problems we are faced with is contacting old clients whose information has not been kept current.

It is a common practice for attorneys to hold their clients original documents. Often clients will give their drafting attorney the original estate planning documents because the attorney has a fireproof safe or some other way to keep the documents safe. But an important factor would be keeping the attorney abreast of any new living arrangements and contact information.

I am not placing blame on anyone but if I had given my attorney important information for safekeeping, such as my original estate planning documents, I would do my best to make sure my attorney could find me if necessary.The problem usually arises when the client has forgotten that they left the documents with their drafting attorney. A lot of time passes and the client believes they have their originals, probably in their safety deposit box. Little do they know they might be setting their beneficiaries up for disaster because no one knows where the originals are and the grantor or settlor has died.

Now, it may be that the client has passed on their attorney’s information to their trustee or executor, and the client did not believe it was necessary to keep the attorney in the loop in regards to a new address and/or phone number. However, my suggestion (not legal advice, just a suggestion) would be that if you move or change your phone number you will want to make sure the attorney who is holding your original documents knows your new information. And you might even go an extra step and give yourself an annual reminder to check in with the attorney to make sure all is well and that no new legislation has passed that might be relevant to your estate. That way, in case something serious happens, such as the attorney passing away or a new law passing, you can be notified.

For questions on the above content or for any other legal advice dealing with California estate planning documents, a California estate planning attorney can help. Please contact the Law Offices of Jack B. Friedell today.

The authors, publisher and host are not providing legal, accounting, or specific advice to your situation.

Jack Friedell
In Advance Healthcare Directive, Estate Planning, Pour Over Will, Power of Attorney, Quitclaim Deed, Trust, Uncategorized

Why you should establish an estate plan today.

Taking the first step in establishing an estate plan

Written by the Law Offices of Jack B. Friedell

Most people we come in contact with believe that an estate plan is important. When we ask them why, they typically don’t know why but heard somewhere that it was important. Then the conversation will end and move on to other topics such as sports.

A lot of people find it difficult to talk about estate planning. One reason is due to their lack of knowledge about estate planning. Another reason is that people don’t like to think about the things estate planning involves: death, taxes, end of life planning, etc…

Here are just a few of the areas that estate planning covers:

  • Revocable trust– also known as an inter vivos trust or living trust. All your assets are placed into your trust so that your estate can avoid a costly probate upon your death. The minimal price it costs to set up a trust is small compared to the cost of having your estate go through probate. A trust also ensures privacy, where as a probate is public and available to anyone.
  • Power of attorney – who will handle your finances in the event that you cannot manage them yourself? If you do not have a power of attorney set up and you become incapacitated, then the court will assign a conservator who will have power of attorney. Having a plan in place ensures that you decide who will handle your financial affairs.
  • Pour over will – A pour over will in California will provide directions that all your assets are to be placed into your trust upon your death. Basically, any asset not included or funded in your trust will “pour” into your trust upon your death.
  • Advance healthcare directive – An advanced directive, also known as a living will, allows doctors, family and friends to know your health care wishes so that if you are incapacitated there is a plan in place. You make the decisions ahead of time so that your family and friends are spared the pain of having to make potentially life ending decisions if you cannot. This includes directions on what to do if you are in a vegetative state. As many as 30,000 persons are kept alive in comatose and permanently vegetative states.
  • Finally, any good California estate planning attorney will help you transfer title to real property into your trust. A quitclaim deed is used to transfer your real property into your trust. If you have refinanced your home recently your home may have been taken out of your trust. It is important that your property is transferred back into your trust because the title company seldom does this. You will want to make sure what is probably your biggest asset is protected from probate.

Hopefully you can see the importance of having an estate plan in place. If you still have questions you can read more about estate planning on our estate planning 101 section.  If you are single but you own a lot of assets, you might want to consider an estate plan. If you are married, then an estate plan should be at the top of your to-do list. If you own a home in California, then a properly funded living trust will help your estate avoid probate. Take the first step today and educate yourself on the importance of an estate plan.

For questions on the above content or for any other legal advice dealing with estate planning documents in California, an estate planning attorney in Carlsbad, California can help. Please contact the Law Offices of Jack B. Friedell today.

The authors, publisher and host are not providing legal, accounting, or specific advice to your situation.

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