When is Probate Triggered?

probate

Do you know what PROBATE is?

Do you know how it is triggered?

Well, if you are over the age of 18, have more than $150,000 in assets, and die without a trust, probate begins.

That also means if you only have a will, your estate must still be probated. A will simply gives instruction as to how you want your estate distributed.

A trust is the only instrument that can keep you out of probate when you estate is over $150,000.

So, if you own a home or have other assets that exceed $150,000- be sure you create a trust!

Baby, It’s Cold Outside!

written by California Estate Planning Attorney Carmen Rosas.

 

I hope everyone is staying warm! It’s been extremely cold here lately in sunny California! I woke up to pictures of thermometer readings on Facebook this morning. That’s when you know the temperature is extreme for the Golden State! Although there isn’t any snow, it’s still pretty close to freezing!

Anyhow, I’m going to take a moment this morning to remind you a little bit about how probate can be just as cold as this 30 degree weather. Now, that’s not to say that for some people, probate may be beneficial, but for most of us out there, probate is frightful subject (nothing delightful there! Horrible, I know!)

Probate is long and lasts at minimum (with budget cuts and what not) one year. That’s one year without access to funds for funeral/cremation expenses. One year without access to money to pay last bills, the inability to transfer homes, and the inability to mourn/celebrate the life of a loved one because of logistical issues with probate.

With the cold, icy weather upon us, and possibility of rain and sleet, accidents are more likely to happen. And no I’m not saying because the weather is crappy, you’re going to get in a car accident, but the chances increase. I just want you and your family to be protected.

If ANYTHING happens to you or your spouse/partner/baby’s parent, and neither of you could care for your minor kid, do you know what happens? No, they don’t get to go to grandma and grandpa or auntie or uncle. They risk going in to foster care until a judge can decide where the minor(s) should go. This is a scary situation, especially for little ones.

So, if the length and annoyances of probate aren’t enough, or your children going to foster care isn’t enough, then how about giving away $10,000 of your hard earned money to an attorney and the state? Didn’t think so.

This is why estate planning is ESSENTIAL. And, unless you have a really complicated estate and are a gazillionaire, your estate plan will be about 1/3 of what probate costs, it will be PRIVATE, and your loved ones will have an easier time dealing with the logistics/technicalities of your incapacitation or passing.

So, on that note, stay warm and get to work- make an appointment with an estate planning attorney (yes, even if it isn’t me)!

What is a Trust?

A trust is simply a contractual arrangement between three parties – the Trustor (aka the Grantor or the Settlor), the Trustee and the Beneficiary – which specifies the rights, responsibilities and obligations with respect to assets that the Trustor has transferred to the trust and that should be distributed to the Beneficiary.

Trusts can be revocable or irrevocable. A revocable trust means that it can be changed/amended during the Trustor’s lifetime. An irrevocable trust cannot be changed. A revocable trust, depending on the language can become irrevocable immediately upon death.

Trusts help to avoid Probate upon death and Conservatorship during the lifetime. In addition, trusts can accomplish a variety of objectives when planning an estate:

  • Minimize estate taxes
  • Hold assets for minor, disabled, or financially irresponsible beneficiaries.
  • Create flexibility in estate planning for couples in a second marriage.
  • Living TrustProvide asset protection and divorce protection for beneficiaries of the deceased.

The next question is DO I NEED A TRUST?

Well if you answer “yes” to any of these questions, you should consult an attorney to figure out whether or not a trust is the right move for you.

  • Do I have minor children who I wish to provide for at my death, but yet delay distributing money to them until they are older so that they are better able to handle the money responsibly?
  • Do I have an adult child who is disabled or incapable of handling his finances?
  • Do I have a child with a drinking, drug or gambling problem?
  • Do I have an adult child with an untrustworthy spouse?
  • Do I have a child who is so successful that he will be subject to his own estate taxes?
  • Do I have a child who is in a business or profession potentially subject to personal liability?
  • Am I divorced and do I have minor children?
  • Am I re-married and have children from a prior marriage?
  • Am I concerned about the privacy of my affairs and the affairs of my heirs after my death?
  • Am I concerned about the costs and timeliness of concluding my affairs after my death?
  • Do I own real estate located in a state other than the state in which I reside?
  • Do I trust the federal government to continue to allow a couple to transfer $10.5 million of assets at death without paying federal estate taxes?

If you want to know more about the Top Estate Planning Documents check out our old post here.

Want to know more or set up a plan? Give us a call.

Appointing a Guardian After Divorce

All families need to appoint a guardian if there are minor children involved.

However, in cases of divorce, when one parent dies the other parent will get custody of the child, even if they did not previously have primary custody. In cases like this, it is VERY important that parents create a plan especially where the other parent may be deemed “unfit,” negligent, or in cases of abandonment.

In a guardianship proceeding after the death of a child’s parents, California court typically looks first to the desires of the parents as expressed in their wills.

SPECIAL ISSUES FOR DIVORCED OR REMARRIED COUPLES

After a divorce, if either parent dies, then the surviving parent normally will have full custody of the children (even if the deceased parent had primary custody) unless a court finds that the survivor is not a “fit and proper person” to have custody. If one parent believes that the other should not have sole custody, he should plan in advance.

Other family members might need to be prepared to petition the court for a third-party guardianship in the event of the custodial parent’s death.

In addition, if a deceased parent fails to name a Trustee or “Guardian of the estate” for any property inherited by a child, the surviving parent will normally be appointed to manage and control the money. Since many marriages fail because spouses do not agree about financial matters, divorced parents often prefer to leave a child’s property to him in a trust managed by a third person, working with an institutional trustee.

INTESTACY AND DIVORCE

Like intestacy for married or single people, where there is no will, your assets can potentially fall into the hands of your ex.

If you were to die intestate, leaving one or more children who are not also your surviving spouse’s descendants (most commonly, children from your prior marriage – whether or not they live with you, and whether or not they are adults or minors), under California law your children (and grandchildren whose parents have died) would split two-thirds of your estate at death, while your surviving spouse would take only one-third. Moreover, your surviving spouse would be required to apply to the court to be appointed as a guardian of any property left to any minor children of you and your spouse.

Without appointing a guardian of the estate (for the “stuff”) your ex will be in charge of handling your child’s inheritance.

For more info, check out our previous blog posts on estate planning and divorce- HERE and HERE.

And if you haven’t RSVP’d for our workshop on HOW TO APPOINT A GUARDIAN, click here to join us!

“Screw College! I’m 18 and rich!”

Happy Wednesday folks!

I read an article last night regarding the importance of your children’s age when leaving an inheritance.

When I speak to my clients, I often explain to them that although at 18 an individual is legally an adult, many 18 year olds are just entering college and aren’t thinking about long term financial stability.

They are aren’t thinking about life after retirement or even starting their own families. Very few 18 year olds are mature enough to handle thousands of dollars, or if they’re lucky, millions.

Clients are usually advised to allow the initial distribution at the age of 25, and continue the distributions until about 35. This allows children to go through college, establish their careers, start their families, save and begin thinking about retirement. At 35, the inheritance they receive won’t deter them from the hopes and dreams you have for them or the ones they have for themselves.

But, if you don’t have an estate plan, you don’t have control over this and whatever is left after probate fees, will go directly to your children at the age of 18. Yikes!

What age do you think a child is financially mature enough to receive an inheritance??

Prepare for the unexpected

As many of you have heard, actor James Gandolfini passed away Wednesday, unexpectedly. CNN reports that the cause of death is unknown but his managers say it may have been the result of a heart attack. Gandolfini was a great actor and his loss is shocking to people everywhere.

When someone passes unexpectedly, it can be a very traumatic experience. There is no real chance to say your “goodbyes” or even “prepare yourself.” For this reason, it is important that you and your family have an estate plan that prepares you for the unexpected.

Some points to consider:

  1. Gandolfini left behind a wife, young child and a son from a previous relationship. Without an estate plan, Gandolfini’s property will likely go to his wife and could ultimately leave his teenage son with nothing. If you are part of a blended family, this is something you should consider.
  2. Death or incapacity can happen at any time. Be sure you plan and prepare your family to handle your affairs when you no longer can.
  3. Create a plan that ensures your wishes and desires regarding your property and your remains are followed.

If you would like more information on how to create an estate plan, contact our Redwood City Estate Planning Attorney for assistance.

Keeping Gandolfini’s family in our thoughts and prayers as they mourn their loss.

A Smart Man “Dies Like an Idiot”- He left his millions to no one.

I came across an article about a Holocaust Survivor who left his estate, that was worth almost $40 million, to no one. Yes, I said almost $40 million left to no one (insert loud gasp here!)

So, what happened to this millionaire’s estate? The state of New York is the proud owner of those millions. As I have mentioned in the past, if there is no will or trust dictating where your assets should go, the state determines where those assets will be distributed.

In this case, Mr. Blum left no instructions as he had no will or trust. He left it up to the state to determine where his millions should go. Because the state could not find any heirs, even after doing a world wide search, and the estate is unclaimed, his millions will go to the State of New York.

Mr. Blum was not a dumb man. He was smart and according to his accountant he knew how to name beneficiaries and knew what had to be done.

Although escheating to the state is incredibly rare because the laws of intestacy look for any living relative including cousins and their descendants and any one who falls under the nebulous term “next of kin,” it does happen.

The moral of this story? PLAN!

You may not own millions but you also want to ensure that whatever assets you do own are distributed in a way you want them to be.

If you want assistance in creating an estate plan specific to your needs, contact our Redwood City estate planning attorney at 650-503-3770. At the Law Office of Carmen M. Rosas, we ensure that every plan is unique to our clients and their families.

 

 

 

“My parents aren’t getting any younger. How do I talk to them about Estate Planning?”

It’s Monday! That means its the start of a new “work” week and time to get things done!

I was talking to a client last week (let’s call her Cristina), a wife and mother of two young children. We were getting her estate plan executed. At the end of our meeting she said, “My parents aren’t getting any younger. How do I talk to them about Estate Planning?” Cristina continued on to tell me how she knew it was important, but couldn’t find a way to begin the discussion with her parents.

Aging-Parents

Cristina isn’t alone. There are thousands, possibly millions, of people who have reached retirement age and still don’t have estate plans. As a young professional, starting a family of your own, it’s important for you to create an estate plan for your family but it is also very important to make sure your parents have one.

I came across this article this morning from the Guardian Fiduciary Services on the 25 Best Questions to Ask Your Aging Parents. Although this isn’t a full and complete list, its a starting to point to get your parents discussing their plans in regards to estate planning.

When discussing estate plan options with your parents and their plans, it’s important to emphasize the importance of THEIR wants and desires- you and your siblings (if any) want to know how to distribute their hard earned assets in whatever way they want.

It may be hard at first, but GET TALKING! Use the questions above to open up a dialogue. You know your family’s dynamics best, but be sure that everyone that needs to be included in the conversation is present, or at least knows whats going on.

Do you have any suggestions on how to begin this conversation? What has worked for you? We look forward to your feedback!

And if you want to have a one-on-one chat with our San Mateo County, Alameda County or Santa Clara County attorney, feel free to send us a note.

What is probate and why should you avoid it??

Probate is the court proceeding that happens when someone dies without proper estate planning. In California, if an estate is larger than $150,000 and a trust is not created, the estate is subject to Probate.

The general purpose of probate is to collect and account for all the assets of the deceased; liquidate the assets into cash; attempt to negotiate a reduction and then pay all outstanding debts and taxes of the deceased and distribute the monies or assets per a will or to the immediate spouse/children/siblings/relatives of the deceased.

This means a few of things:

  • You don’t get to decide who gets what
  • It costs a lot of money (Probate fees are set by statute, the larger the estate, the higher the fee. An individual estate with one house and bank accounts could easily hit the $10,000 mark)
  • You don’t get to decide who your minor children live with
  • It could take more than a year to get everything settled- and that’s if there are no real complications.

Now, wouldn’t you rather sit down with one of our attorneys and create an estate plan that suits your needs where you get to decide what happens to your estate and children without the added cost to your loved ones once you’re gone?

Schedule a planning session with us by visiting our website, creating an account and scheduling an appointment online, or calling us at 650-503-3770.

Visit our estate planning attorney in San Mateo County, Santa Clara County or Alameda County.