The information provided below is explanatory in nature only, and
is not intended as a substitute for legal advice concerning your
specific circumstances. Please ensure that you consult an attorney
in connection with the formation of or any changes to your estate
1. What is probate and why is it generally advisable to avoid it?
Probate is the court-supervised process developed under California
law which has as its goal the transfer of your assets at your death to
the beneficiaries set forth in your will. It also provides for the
relatively expedient resolution of any claims against your assets at
your death. If you die "intestate" (that is, without a will or trust),
your estate is still subject to probate court administration and the
person appointed by the court to handle your estate is known as the
"administrator." If you die with a properly funded and maintained
revocable living trust in place, your estate should not need to go
through a probate administration.
Probate has advantages and disadvantages. The probate court is
accustomed to resolving disputes about the distribution of your
assets in a relatively expeditious fashion and in accordance with
defined rules. Thus, if you have a significant amount of claims
against your estate, it may be advisable for your estate to go
through the probate process.
However, the disadvantages of a probate administration generally
outweigh the advantages. Probate proceedings are not private, and
thus your estate plan and the value of your assets become a public
record. Also, because attorney's fees and executor's commissions
are based upon a statutory fee schedule, and because the probate
process is a lengthy one, the expenses are often much greater than
the expenses incurred by a comparable estate managed and
distributed under a living trust. Finally, distributions can be made
pursuant to a living trust more quickly than in a probate proceeding.
2. If I have a will, will my estate still have to go through probate?
Yes. Although a will provides for the disposition of your assets in
the manner that you choose, and also includes any applicable
provisions regarding guardianship of your minor children, it does not
allow your estate to avoid the probate process.
3. What does a revocable trust accomplish?
A trust is a written agreement between the individual creating the
trust and the person or institution named to manage the assets
held in the trust (the "trustee."). A revocable living trust may be
amended or revoked by the person creating it (commonly known as
a "trustor," "grantor," or "settlor") at any time during the trustor's
lifetime, as long as the trustor is competent. The terms of the trust
become irrevocable upon the grantor's death. Because the trust
contains provisions which provide for the distribution of your assets
on and after your death, a properly funded and maintained trust
eliminates the need for the probate with respect to those assets
which were held in your living trust at your death.
Certain types of trusts may reduce your federal estate tax liability
upon your death, or eliminate them altogether. Your individual
financial situation must be assessed in order to determine the best
plan for you.
4. Does establishing and funding a revocable trust mean that my
estate will not be taxed at my death?
No, a revocable trust is a mechanism used to both avoid probate,
and sometimes to reduce, defer, and/or eliminate estate taxes
upon death. The current estate tax exemption amount is $5 million
per U.S. citizen.
5. What is a Durable Power of Attorney for Finances?
A durable power of attorney is a written legal document that gives
another person the right and authority to act on your behalf in the
event that you become incapacitated. You can specify any and all
financial actions that you do and do not wish your attorney-in-fact to
be able to take within the durable power of attorney. Generally, an
attorney in-fact has at least the authority to handle all regular
financial matters, such as the payment of household bills and
depositing checks. If you become unable to handle your own
finances and have not prepared such a document, your spouse or
closest relatives will have to ask a court for authority over your
financial affairs. This procedure can be quite time consuming and
6. What is an Advance Health Care Directive?
An Advance Health Care Directive, sometimes referred to as a
durable power of attorney for healthcare or living will, allows you to
name someone to make medical decisions for you in the event that
you are no longer able to do so yourself. In addition, you may
include detailed instructions regarding your future medical care, such
as the use of life-support or other life prolonging methods, pain
medication, and any specific surgical procedures you have strong
7. What can I do to ensure that my children are taken care of in the
event that I pass away before they become adults?
Under California law, if both parents are deceased, a minor child is
not legally qualified to care for himself or herself. In your will,
therefore, you should nominate a guardian of your minor children to
supervise that child and be responsible for his or her care until the
child is 18 years old. Such a nomination can avoid a "tug of war"
between well-meaning family members and others if a guardian is
A minor is also not legally qualified to manage his or her own
property. Assets transferred outright to a minor must be held for the
minor's benefit by a guardian of the child's estate, until the child
attains 18 years of age. You should nominate such a guardian in
your will as well. In providing for minor children in your estate plan,
you should consider the use of a trust for the child's benefit, to be
held, administered and distributed for the child's benefit until the
child is at least 18 years old.
8. We want to leave something to all three of our children, but one
of our sons has a gambling problem, and is very irresponsible with
money. Is there anything we can do to limit the amount of property
he receives, and how frequently he receives it?
Yes, there are several types of trusts that can be used to impose
controls over property. For example, a spendthrift trust permits the
trustee to spend trust money for the beneficiary's needs or make
payments directly to the beneficiary in the trustee's discretion, but
th ebeneficiary has no right to spend or pledge any trust principal.
The trustee may even be given the discretionary power to cut off
benefits, temporarily or permanently.
9. What types of tax-free savings plans are available to assist me
in saving for my childrens' college funds?
A 529 plan is a tax-free investment account established to pay for a
family member beneficiary's higher education expenses. Such
expenses include tuition, books, supplies, fees, and equipment
which are necessary to attend graduate school, college, and some
vocational institutions. For any given beneficiary, an $13,000 annual
contribution may be made to a 529 account free of gift tax. You
may also make a $65,000 contribution ($130,000 for married
couples making a joint gift) and face no gift tax consequences if
you make no additional contributions for five years, and you live
five years following the contribution. Following the contribution, the
account grows tax free, and and no income tax is assessed on the
funds paid from the plan for qualified higher education expenses.
Note that because a 529 plan is essentially a securities investment,
one must be selective in choosing a plan manager.
A second type of educational savings plan is a Coverdell account.
You may contribute up to $2,000 per year for any one beneficiary
(although contribution amounts are phased out for those with higher
incomes). Contributions are not tax deductible when made, but the
account funds are not taxed when qualified withdrawals are made to
pay for a child's educational expenses.
10. What is the cost of setting up an estate plan?
The fee for each estate plan varies based upon the complexity of
your individual case. The fee generally includes a will and/or trust,
as well as a Durable Power of Attorney for Finances and Health Care
Directive. Within our initial consultation, I will quote a set range for
my fees, so that there are no surprises or questions if you decide to
use my services.