A living trust is a great way to simplify matters for your heirs and avoid probate. Since assets that are a part of a trust are passed on differently than those in a will, your heirs may receive their inheritance faster and with fewer legal fees. The difference is in the way the trust is funded. Only a correctly implemented trust will save time and money and avoid lengthy court proceedings.
Why Executing the Trust Properly Is Vital
A 2012 case in El Dorado, California brought this topic to the fore. In the case, an older woman had executed a trust leaving her home to her daughter. Three years later, she changed her trust to make her son the heir but failed to change the deed on the house. Thus, the conflict was whether or not the house should be left to the son or daughter.
In the end, the son received the house due to California law allowing for the transfer of the property to the new trust. However, it took 5 years longer than it should have for the son to get the home. So it still drives home the point of properly executing a trust in order to avoid long legal battles.
Help in Executing Your Living Trust in Sand Diego, California
San Diego, California residents can trust the experienced attorneys at Petrov Law Firm to help execute your living trust properly. This will make for a smooth transition in the future when your heirs receive their inheritance. To learn more and to start planning for the future today, call 619-344-0360.Read More
It is not always necessary to create a trust prior to your death. In fact, it is quite common to stipulate that a trust will be created upon your death. There are several reasons for creating a trust, but generally the purpose of the trust is to protect your assets and to ensure continued use of your accumulated wealth for a specific purpose.
If the beneficiary of your estate is likely to have significant debts, the trust can help protect your assets from becoming part of collection efforts levied again the beneficiary.
If your beneficiary is a minor, has special needs, or is likely to waste the principle, a trust can ensure a life-long stream of income. You can protect the money while allowing your beneficiary to use any earned interest. Annuities are commonly used as an investment tool with a guaranteed monthly or annual payout.
You can also use your trust to stipulate the use of your assets. For example, you could set aside a specific amount of money to be used for education or a real estate purchase.
A trust is a significant tool for generational tax planning. When you have valuable cash assets and real estate, a series of trusts for the benefit of the entire family will ensure your great-grandchildren benefit from your assets.
Consult with your estate planner and discuss the possible use of your assets. And don’t forget to account for the growth of your wealth for the length of your life — however long that may be.Read More
One of the most important parts of an estate plan is something we call a living will. While most of us hope that we will not need one, the fact is they are needed to ensure that your life-sustaining wishes are met. According to a recent poll done by Findlaw.com, only 38% of Americans have a living will. Popular cases like the Terri Schiavo case often make it on the news and show just how important a living will be.
Is it anyone’s wish to have their loved ones fight each other to determine whether to pull the plug or pull a feeding tube? A living will allows an individual to make that decision on their own. It is a simple document and one that should come in any living trust that you make. If you had a living trust done and a living will (or health care directive) was not part of it, please contact your attorney and make sure that he or she writes one up for you.Read More
An example of many estate plans in California:
Harry and Wendy own a modest home in San Diego, CA. The value of the home is $600,000.00 with a $350,000.00 mortgage. Harry and Wendy have two children, Steve and Debbie. Harry and Wendy have a
bout $200,000.00 in retirement accounts and another $100,000.00 in various stocks and bonds. They each also have $300,000.00 life insurance policies for each other. Harry and Wendy do not have any estate planning documents. Harry dies and shortly thereafter, Wendy passes away as well. What happens with the estate?
After Harry’s death, all the property was transferred to Wendy because they were married. At her death, Wendy now owns a $600,000.00 home with a $350,000.00 mortgage, $300,000.00 in retirement benefits and various stocks and bonds and $300,000.00 from the life insurance. Since there was no estate planning, her estate will now go into probate.
Costs for probating an estate are set by the California laws and are a percentage of the gross asset value of your estate. For example, the value of Wendy’s home for probate purposes would be $600,000.00 (the value of the home), not $250,000.00 (the equity in the home). As such, Wendy’s estate would be worth $1.2 million. The probate fees are as follows: 4% for the first $100,000.00, 3% for the next $100,000.00, 2% for the next $800,000.00, 1% for the next $9 million and 1/2 % for the next $15 million (court determines the fees for any estate over $25 million). Using this formula, Wendy’s probate fees would be $25,000.00 just for the attorney. The executor or administrator of the estate is paid using the same scale. This means that Wendy’s estate would have to pay $50,000.00 just in statutory fees which do not include special fees for the sale of assets, tax preparation and/or litigation fees. After these fees, the court will then determine who will get the money from the estate. With a property estate plan, however, the probate fees would be $0 and Harry and Wendy would decide who would inherit their estate.
Probate fees are easy to avoid. Creating a proper estate plan will save Harry’s and Wendy’s family thousands of dollars not to mention the headaches involved in probate. If you or someone you know needs an estate plan, please call us at 888-688-4363 or visit our website at www.thecplawfirm.com.Read More