avoiding probate Archives - Lonich Patton Ehrlich Policastri

What Is A Revocable Living Trust And Why Should You Have One?

January 8, 2020/in Estate Planning /by Michael Lonich

As the holidays approach, you might be thinking about family more. You want to take care of your loved ones, and while it’s a hard subject to discuss, you need to make sure everything is prepared when something happens to you. The holidays are a good time to put your affairs in order and make sure your estate is in place so that when that time comes, your family can get through the process as easily as possible. If you know anything about probate, you probably know how time-consuming and expensive it is. A revocable living trust creates the opportunity to avoid probate and is an amazing estate planning tool.

What Is A Revocable Living Trust?

So, what is a revocable living trust? A trust is an arrangement with a third party to hold assets that will eventually be passed to a beneficiary. A revocable living trust means that the stipulations of the trust can be changed while the trustor is living and capable, as their situation evolves.

Why Set Up A Living Trust?

A lawyer and client go over paperwork for setting up a revocable living trust

In estate planning, setting up a living trust is recommended for a common reason – to avoid probate. Probate is the lengthy court process in which the passing of assets are determined by a judge. It can take months to several years depending on the case.

Many people don’t even have wills, let alone trusts. Wills are important to putting your affairs in order, but they cannot avoid probate. For assets to pass through a will, you must die first – unlike a living trust – and all assets must go through probate whether you have a will or not. Living trusts are usually able to bypass the probate process altogether, saving your loved ones time and money.

If you live in San Jose or the greater Bay area, set up a free consultation with our estate planning attorneys to learn about living trusts.

How To Set Up A Revocable Trust?

There are a few steps that go into setting up a living trust. You must set up the trust while you are alive. You will need to work with an attorney to figure out the trust’s specifications such as who assets will pass to and how they must pass.

For example, you can create a joint living trust for yourself and your spouse. If one spouse dies, the assets will pass to the living spouse, and after their death, the assets will pass to whomever you name beneficiary next in line. You can stipulate that the assets or property only pass under certain conditions such as if your daughter graduates college. This allows you to control and protect your assets, even after your death.

An attorney hands over keys to a property that was listed in the revocable living trust to the beneficiary.

After you’ve worked with an estate planning attorney to put together a trust, you’ll have to fund the trust. This requires you to place property and assets in the name of the trust. Instead of the property being under the name “John Smith,” it will be titled “John Smith, Trustee of the John Smith Trust.” Forgetting to fund your trust can result in added expenses upon your death and a lengthy process to distribute assets in probate.

Living trusts aren’t right for every situation however, so you should consult with an experienced estate planning attorney before setting one up.

Live in San Jose or close by? Contact Lonich Patton Ehrlich Policastri to find out if a revocable living trust is right for you.

Aretha Franklin Did Not Have a Will

February 28, 2019/in Estate Planning /by Michael Lonich

But Did Aretha Franklin Need a Will?

Tragically, Aretha Franklin passed away on August 16, 2018 from pancreatic cancer. She left behind four sons but no will or estate plan. Because she did not have a will, during the court process all her assets will be made public. Aretha Franklin’s estate is estimated to be around $80 million and includes financial accounts, personal and real property, and music copyrights. The law of Michigan, where Aretha Franklin died, requires that her assets be divided equally between her four sons. While this may seem simple, it is very common when there is no will for the estate to be contested.

For example, Prince’s estate has been highly contested by the executor of his estate, Comerica Bank and Trust, and his heirs – his six siblings – over the value of his estate and how it should be divided. Prince passed away in 2016 and his $200 million estate has paid lawyers and consultants over $5.9 million while his heirs have yet to receive anything. Lawyers for three of Prince’s heirs claim that it is a “legitimate concern” whether Prince’s heirs will receive anything at all.

If Aretha Franklin had created a trust, her estate would remain private, fees would be reduced, and her heirs would receive their portion of the estate much faster.

Do I Need a Will?

Over half of Americans do not have a will. Most claim they have simply not gotten around to it and many believe that they do not own enough property to pass down.

While most Americans will not leave behind an estate as large as Aretha Franklin or Prince, a will or trust is still extremely valuable.

It is important to remember that your debts as well as your assets are included in your estate. With a will, you can dictate which debts are paid first, this could allow specific property to not be used to pay debts.

Another crucial element is guardianship of children. When there is no will, the court will appoint a guardian. The court will generally appoint the surviving spouse as guardian. However, if the spouse is unavailable the court will appoint a grandparent, and failing that, the next closest relative. With a will, you may nominate a specific guardian who you feel will be best equipped to care for your children.

One more significant factor to consider is who you want, or who you don’t want to execute your wishes. In California if you do not leave a will, your family members may petition to be the administrator of your estate. The court will appoint the petitioner as an administrator if all family members with higher priority decline to serve as an administrator. With a will, you can appoint an executor who you feel is most capable. Alternatively, you may spell out in your will who you do not want to execute your will.

There are many tangible benefits of a will, however the process of drafting a will can be complex. If you are considering a will or another form of estate planning, please contact one of the experienced attorneys at Lonich Patton Ehrlich Policastri. We offer free half-hour consultations.

Please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

Three Things to Know About Creating a Living Trust

July 27, 2016/in Estate Planning, Probate /by Virginia Lively

First, one of the biggest advantages of creating a living trust is avoiding probate court. Administering a will or trust through probate court takes time and money. A living trust is a great estate planning vehicle because it can keep the entire administration process court-free. When the settlor of the trust passes away, the terms of the trust dictate how the estate should be administered. In turn, probate court is avoided.

Second, make sure that the successor trustee is someone who is capable of administering the trust. Often times, the oldest child is chosen to be the successor trustee. However, the oldest child is not always the right choice. A successful administration requires a trustee who is organized, diligent, and capable of administering the trust. It is also beneficial to have someone with an understanding of accounting. If your oldest child does not have any of these characteristics, consider appointing another child, relative, or friend. If no one you know is capable of administering the estate, you may have to hire a third party. There are a number of trust companies and banks that administer trusts. The biggest concern about hiring a third party is the administration fees, which can be substantial. If your estate can handle the fees, a third party may be the right choice for you. Lastly, a trust will never fail for lack of a trustee. If the elected trustee refuses, another one will be appointed.

Finally, creating a trust avoids California’s intestacy laws. A state’s intestacy laws provide the default estate plan for those who die without a will. In California, the beneficiary of a decedent’s estate depends on whether the property was community property or separate property. Assuming that decedent was married and had community property, the surviving spouse’s intestate share is the decedent’s one-half share of the community property. On the other hand, if the decedent’s property was separate property, the intestate share of the surviving spouse depends on how many children the decedent had, if any. While it is important to know a state’s intestacy laws, they should be avoided at all cost. Thus, creating a trust is a way to avoid intestate succession and have your estate administered the way you want it.

If you are interested in creating a living trust or have any questions regarding your current estate plan, please contact the experienced estate planning attorneys at Lonich Patton Ehrlich Policastri for further information. The attorneys at Lonich Patton Ehrlich Policastri have decades of experience handling complex estate planning matters, and we are happy to offer you a free consultation. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

Sources:

California Probate Codes § 6400-6414.

What is Probate and Why Should I Avoid It?

February 21, 2014/in Estate Planning, Probate /by Michael Lonich

Probate is a court process that is known for being time-consuming and expensive. It is also a public process that makes personal information about your assets and debts part of the public record. If you die without a will, the probate process can be a nightmare for your family. However, even if you have a well-written will, the probate court still must oversee the payment of your debts and distribution of your property. These are just a few of the reasons why many people want to avoid sending the estate, and oftentimes their family, through the probate process after their death.

To avoid the probate system entirely, you will need to use an estate planning vehicle other than a will to transfer property after your death. For example:

Life insurance: Life insurance policies generally pass outside of probate as long as there is at least one named beneficiary.
Retirement accounts: Similarly, retirement accounts, including IRAs and 401(k) plans, pass outside of probate as long as there is at least one named beneficiary.
Joint tenancy real property: If you own a home with your spouse (or any other individual) as joint tenants with right of survivorship (as opposed to tenants in common), your ownership interest will be “extinguished” upon your death and the remaining owner will own the property outright as a matter of law.
Joint tenancy bank accounts: Bank accounts may also be held in joint tenancy so that when one spouse (or account holder) dies, the other spouse (or account holder) is automatically the sole owner of the account.
Pay-on-death accounts: Selecting a pay-on-death beneficiary for bank accounts or investment accounts allows you to designate who your accounts will be transferred to upon your death without the need for probate.
Trusts: A living trust is a legal document that, much like a will, contains instructions for what you want to happen to your property when you die. But, unlike a will, a living trust can avoid probate at your death. While you place your property and assets (i.e., your family home) in the trust, you maintain control over all trust assets during your lifetime. When you are no longer alive, your property can be transferred to your designated beneficiaries in a timely manner without going through probate.

Trusts are a favorite of estate planners because they are simple, flexible and effective. Trusts can be used to easily transfer property to family members or charitable organizations at death. In some circumstances, trusts can also be utilized to decrease or minimize estate taxes.

If you would like to learn more about trusts or avoiding probate in general, call Lonich Patton Ehrlich Policastri to schedule a free half-hour consultation. Our attorneys are passionate about estate planning and have decades of experience handling complex estate planning matters, including wills and living trusts. If you are interested in developing an estate plan or reviewing your current estate plan, contact the experienced estate planning attorneys at Lonich Patton Ehrlich Policastri for further information.

Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

Protecting the Hand-Me-Down Business

February 12, 2013/in Business Law, Estate Planning /by Michael Lonich

Big businesses routinely have succession plans in place. Do smaller family-owned businesses? Infrequently, which is surprising and unfortunate. Without well thought-out succession plans in place, many family-owned businesses cease to exist.

To be sure, many family business owners would love to eventually “pass the torch” to a son or daughter. But what will happen in the event of sudden death or disability before they are ready to accept the responsibility? It is in the best interest of all parties involved that a proper estate plan is in place to avoid probate of business assets. The probate process is expensive, may take upwards of two years, lacks privacy, and takes nearly all control out of your family’s hands. Additionally, a plan could eliminate potentially crippling estate taxes on the business.

A business is a sophisticated property interest. For an owner of a small family business, however, the business is more than just a source of income—it represents the history and livelihood of their clan. With adequate planning, the business and its value may be protected, perhaps by creating a family limited partnership or by placing the family’s assets into a living trust. There can be significant estate tax advantages to creating a limited partnership for your family business and transferring minority interests to future inheritors.

Estate planning is a complex field. Whether you are concerned with devising a plan for either a family estate or that of a business, it is important to get good advice. The attorneys at Lonich Patton Ehrlich Policastri have decades of experience handling complex estate planning matters including business succession plans, wills, and living trusts. If you are interested in developing an estate plan or reviewing your current estate plan, contact the experienced estate planning attorneys at Lonich Patton Ehrlich Policastri for further information.