What is Estate Planning?
Estate-planning is a term that generally describes the process of making a plan as to how your assets preserved, managed and distributed both during your life and after you are gone. The process of creating an estate-plan is controlled by California law, which require that specific documents be utilized depending on your situation. These documents usually include some combination of a trust, pour-over wills, a financial power of attorney and a health care power of attorney.
Why do I need an Estate Plan?
There are several goals of estate planning, which include:
- Minimizing estate taxes.
- Avoiding probate.
- Ensuring that your assets pass to the beneficiaries you choose in the manner you deem fit.
- Name your trustee, so that the person/people who you trust are in charge of your estate if something happens to you.
- Naming your chosen guardians for your children.
- Name your agents under your financial power of attorney, so that if you are ever incapacitated and unable to handle your own finances the person you select is in charge.
- Name your agents under your health care power of attorney, so that if you are ever incapacitated and unable to handle your own finances the person you select is in charge.
What is a trust?
A trust is a legal construct permitted under California law that allows you to decide when and how your assets will pass to your heirs. The most common type of trust is referred to as a revocable living trust, which is intended to benefit the creators of the trust (called “settlors”) during their lifetime, and then pass to designated heirs upon their passing. One of the most beneficial aspects of a trust is that it allows a person to bypass the probate process and instead have their assets pass in a streamlined fashion as they deem fit. A trust also allows a person to designate their trustee, or the person who will be in charge when they are either unable to act as trustee, have resigned, or have passed away.
In order to be a legally effective document, a trust must fulfill several requirements. Hollingsworth Law Firm can assist you in creating your trust to make sure that your assets are taken care of.
What is Probate?
The term “Probate” in California generally refers to the legal process of administration of a person's estate with court supervision. As of 2022, if a person dies with an estate containing more than $55,425.00 real estate, or more than $166,250.00 in non-exempt assets (usually a combination a real estate and liquid assets), and if that person does not have a trust, then it is likely that their heirs will have to go through the probate process. Even if a person has a will, they will not be exempt from probate unless they have their assets in a trust. Hollingsworth Law Firm can assist you in determining whether your assets would require your estate to go through probate in the event of your passing.
The probate process is disfavored because it is public, whereas a trust's administration is generally private. Additionally, the process requires that notice be provided to all of the estate's creditors. Another reason the process is generally disfavored is the amount of time it takes from start to finish, often between 18-24 months, and even longer where there is a dispute.
What assets are exempt from probate?
As stated above, assets held in a trust are exempt from probate. Additionally retirement accounts and life insurance proceeds where legitimate beneficiaries have been named are not subject to probate. There are a number of other “transfer on death” tools that can be utilized to avoid probate. Hollingsworth Law Firm can assist in creating a plan to ensure your assets are not subject to the probate process.
How do I transfer my assets to a trust?
The first step is creating your trust with the assistance of an attorney. Once this is completed, the transfers of your bank accounts and real property can be accomplished with little effort. Hollingsworth Law Firm can assist you in the transfers of California real property, and walk you through the process of having your financial accounts transferred to your trust. Once this is done, those assets are exempt from Probate.