FAQ

This is a question I get asked a lot because there is a lot of misunderstandings around this. To put it as simply as possible it is best to think of estate planning as creating a personalized roadmap or instruction manual for your future and the future of your loved ones. That is it. It outlines who is in charge, what should happen, when it should happen in various circumstances. Most importantly, it's NOT just about what happens after you pass away. That is just one function (one scenario) of an estate plan. - It's about taking care of you during your lifetime. - It's about making sure your wishes are honored if you become unable to manage your own affairs. - It's about setting your loved ones up for success - It's about avoiding court, and controversy. Essentially, it’s about taking control and making sure the people you care about are protected and your assets go where you intend them to, without unnecessary complications or delays.

I know it is blunt and straightforward, but there isn't an easy way to put it and this isn't an area where we can afford to be delicate. What happens is fairly straightforward, but depends upon a few questions: Do you own real property? Do you have more than $250K in assets? If the answer to either of these are yes, you will most likely have to go through probate. We will discuss what probate is in greater detail but this is a formal court process that takes about 18 - 24 months to complete. This process is entirely public, and very costly. TLDR: it is an expensive headache for your loved ones during an already difficult time.

This is another common question. Both of these documents are often found in a foundational estate plan. Both a Will and a Trust are legal documents that specify how your assets should be distributed. The main difference lies in how they distribute those assets. A Will replaces the default probate court rules on how to distribute your assets, but does not avoid probate. So your estate will still have to go through probate. A Trust, on the other hand, allows you to avoid probate entirely. By using a trust the assets can be distributed to your beneficiaries outside of the probate court process. A Trust is private, and in my opinion more efficient way to manage and pass on your assets.

It's a common misconception that estate planning is only for the wealthy or elderly. In reality, estate planning is crucial for everyone, especially if you have minor children. It's not just about deciding who gets what when you die; it's about who will raise your children, how they will be financially supported, and when they will be mature enough to handle their inheritance. If you're 18 or older, you need an estate plan. While the plan for an 18-year-old will differ from that of a 45-year-old CEO, it's still essential. An estate plan ensures someone can make medical and financial decisions for you if you're unable to. For instance, if a college student is injured, how do you access their medical information? Without an estate plan, you can't. It's a necessity often overlooked until later in life.

The goal is to create a complete package that addresses all your needs. So a plan for a 20 year old will be different than a 45 year old executive. However, a comprehensive foundational estate plan usually includes the following core documents: a Revocable Living Trust, a Pour-Over Will (which acts as a backup for assets not in your Trust), a Durable Power of Attorney (to manage your finances if you become incapacitated), a HIPAA Authorization (grants access to medical information to selected people), and an Advance Health Care Directive (to outline your medical wishes and designate someone to make healthcare decisions for you). We'll also consider other various documents depending on your specific set of circumstances. These could be Deeds, assignments and some other key financial documents like life insurance.

Probate is the formal legal process of distributing a deceased persons assets. In California, it is a lengthy and public process, taking anywhere from 16 months to several years. Additionally, it is expensive and as an estimate costs between 4% and 10% of the Gross Value of the estate. The best way to avoid probate in California is usually by establishing and properly funding a Revocable Living Trust. When your assets are held within a trust, they can typically be distributed to your beneficiaries privately and efficiently, without court intervention (and for a fraction of the cost).

A Revocable Living Trust is a legal document that you create allows you to place your assets (like your home, bank accounts, and investments) into the trust during your lifetime. During your lifetime you control the assets (i.e. when to buy, when to sell etc.) for your benefit, and has contingencies in place for if you become incapacitated or die. It also can be changed and updated by you at anytime. A trust always have 3 role or jobs: Grantor (also called the trustor) - this is the person(s) who create the trust. Trustee - this is the person who manages the assets of the trust. Beneficiary - these are the people who get the financial benefit of the trust. So during your lifetime, you serve and sit in all 3 roles. But a Trust really carries it own weight if you become incapacitated or pass away. At that point a successor trustee (someone you've chosen) steps in to manage or distribute those assets (to your beneficiaries) according to your instructions. All without the need for probate court. It's a fantastic tool for maintaining privacy and ensuring a smoother transition for your loved ones.

These roles carry significant responsibility and are very similar. How the differ is based upon what document they are operating under. An Executor is the person named in your Will who is responsible for managing your estate through the probate process. If you don't have a Will, then they call this person the Personal Representative of your Estate. They'll pay debts, collect assets, and ultimately distribute them according to your Will, or intestate succession if you don't have one, all under court supervision. A Trustee, on the other hand, is the person you name in your Trust to manage the assets held within the Trust. They distribute assets according to the Trust's terms, typically without court supervision. The Trustee's role is often more private and efficient than an Executor's/Personal Representative because they don't have or need court supervision.

While every situation is unique, the probate process in Orange County generally takes at least 18 months to 2 years, if everyone gets along. The exact timeframe depends on several factors, including the complexity of the estate, whether there are any disputes, and the current caseload of the probate court but for easy uncontested probate cases 18 to 24 months is pretty safe. If there is any litigation or conflicts among heirs/children then the process will likely take years. This is a significant reason why many of our clients choose to establish a Revocable Living Trust to help their families avoid this lengthy and often frustrating process.

Most people don't ask this question, and it is so important! . . . what will it cost my family if I don't do anything? There are 2 types of fees in California probate court: Statutory (aka Ordinary) Fees - This fee is set by law and is not negotiable. Its calculated as a percentage of the total gross assets of the estate. As the estate gets larger the percentage amount decreases. To see what that looks like take the gross value of your estate (don't subtract any debt or liabilities) and plug it into this calculator. Extraordinary Fees - These fees are requested when an attorney has to do something that is not covered by the statutory fee (hence the term extraordinary fees). The most common examples are dealing with businesses, real estate, tenants etc. As a general rule of thumb attorneys fees will range from 7% to 4% of the Gross Estate. Typically, the more assets you own the lower the percentage will be.