The Estate Law Q&A Series

The Estate Law Q&A Series

I started working for the Law Offices of Richard B. Macgurn in September of this year. While I thought I knew a lot about what is involved in Estate Planning, once I started sitting in on meetings, I realized that the world of Estate Planning is not as straightforward as it seems. There is a lot that goes into Estate Planning. Many of you might think that having a will protects your assets because you have clearly defined what will go to whom after your death. However, what happens to your assets if you become disabled? Do you have a plan in place for that unfortunate eventuality? What happens to you in the event of hospitalization? Do you have a Durable Power of Attorney for Health Care? And even if you have a Will, did you know that Wills usually have to be administered by the court through Probate? Did you know that Probate can be a very expensive and long process? The State Legislature sets the attorney’s fees and the court orders them paid. Did you also know that you are never too young to have an estate plan in place? After all, not everyone dies of old age, and while it may be difficult to think about death, it avoids a lot of problems for heirs and beneficiaries. I asked my sister whether she had a trust and she said, “No, but I have a Will. Why do I need a Trust?” I pondered that question and said, “I am not sure actually. Let me ask my boss, the expert.” And then I thought that since she didn’t know and since I didn’t know why having a Trust might be a good idea, there were probably a lot of people out there who also didn’t know. That realization sparked an idea to interview my boss, the expert, on what he does best and out of that came the Q&A Series on Estate/Probate law. So in case you are wondering the same thing as my sister and me, read on and stay tuned for more Q&A Series with Richard B. Macgurn.

What is a Trust and why do I need one?
A Living Trust (sometimes called an “Inter Vivos” or “Revocable” Trust) is a written agreement which allows you to manage your assets for your benefit during your lifetime and then facilitates the transfer of your Trust Estate to designated beneficiaries at your death by your chosen representative, called a “Successor Trustee.” Anyone with assets in excess of $150,000 should consider creating a Trust. Depending on the circumstances, some people with assets less than $150,000 would also benefit from creating a Trust.

I have a Will. Do I also need a Trust?
For many people, the answer is yes.

A Will is a written document with a plan of distribution of your assets upon your death. Your executor, nominated by you in your Will, carries out your wishes, and notably, nothing in your Will takes effect until after you die. A Will cannot be used to manage your affairs during your lifetime in the event of disability, and it is expensive and time-consuming to probate a Will. The court proceeding (Probate) through which your assets are distributed according to your wishes by the Executor usually takes at least one (1) year. A Living Trust, if properly funded on the other hand, will avoid the need to probate your Will upon death, which usually means less cost to your Estate and faster distribution of assets to your heirs. Your Successor Trustee will pay debts and due taxes, if any, distribute your assets according to your instructions, and manage assets for beneficiaries unable to do so.

Living Trusts will also likely hold up better than a Will in the event that someone contests the distribution of your assets.

Another big difference between the two legal documents is the level of privacy offered with a Living Trust. As a Living Trust is not made public, upon your death, your estate will be distributed in private. A Will, on the hand, is public record and so all transactions will be public as well.

Another benefit is that a Living Trust is invaluable during your lifetime if you become disabled. Your Successor Trustee can more easily oversee your affairs if you become ill or incapacitated. If you simply have a Will for asset management without a Durable Power of Attorney, the court may have to appoint a Conservator for you who will oversee your financial affairs. This is another expensive and time-consuming court proceeding. Your Conservator will have to report to the court for approval of expenses, sales of property, etc. With a Living Trust, however, your handpicked Successor Trustee can manage your affairs without court intervention.

What kinds of Trusts exist and what is the difference between them?
There are many different kinds of Trusts. The most important distinction to be made is: “May the Trust be amended or revoked?” An Irrevocable Trust can generally not be amended (changed) or revoked (removal of some or all of the assets from the trust). The type of Trust that is most common is a Revocable Trust, which can be changed or revoked in its entirety if the creator wishes to do so. A Trust is a very flexible estate planning vehicle.

Do I need to hire an attorney to create a Trust?
As with all legal documents, it is better to have a qualified attorney prepare your Trust. Part of the benefit of creating a Trust and other Estate Planning documents, such as Powers of Attorney, Wills and Health Care Directives, is peace of mind. The best way to achieve that is to retain the services of a Specialist in Estate Planning, Trust Law and Probate certified by the State Bar of California Board of Legal Specialization.

Is it expensive to create a Trust?
Initially creating a Living Trust will likely cost more than creating a Will as it is a more complex legal document. Moreover, you must also transfer your assets such as bank accounts, stocks and bonds, and other investments into the Trust through separate paperwork.

Compare the total costs of legal services if you don’t do estate planning with the costs if you do. When that comparison is made, you cannot afford not to have a qualified attorney prepare your Trust and other important Estate Planning documents to manage your estate.

Richard B. Macgurn charges $400.00 per hour and offers a one half (1/2) hour consultation at no charge. The cost of legal services to create a Living Trust, Power of Attorney for Health Care and Asset Management, Living Wills and documents necessary to fund and effectuate the Estate Plan generally ranges between $1,600.00 to $2,000.00 for over 90% of clients.