Estate Planning Overview
Do I need an Estate Plan?
My general recommendation is that no one needs an estate plan; however,
it is a polite means of asking and enabling people to help you protect
your kids, health and property when you are sick and a cost-effective
means of transferring property on death.
Anyone who has a family that will argue about who should make what decisions
is in a special situation where planning can prevent a lot of heartache
in your absence.
Please review any of my
standard intake forms to learn more about the questions you will be asked at our first meeting,
an overview of the relevant law, what documents you will need to collect,
and the specifics of my billing practices.
What is an estate plan?
An estate plan is a set of documents that tells the court, family members,
and financial institutions who you want to be in charge of making decisions
on your behalf if you are not capable of making decisions on your own
and a set of instructions for how to make decisions about family, kids,
An estate plan, no matter what attorney you use, includes:
- Will or Trust: Designate who is going to be in charge of distributing property
and how they should distribute it. May also include clauses nominating
a guardian for your children.
- Advance Health Care Directive: Designates who will make health care decisions
for you and what decisions you would like them to make.
- Durable Power of Attorney over Finances: Designates who you want to be
in charge of managing your finances if you are incapacitated.
I also include:
Nomination of guardian form and caregiver affidavit. Rather than putting the nominations in the will, I put them in a separate
form in order 1) protect the clients private choices – the form
can be thrown away when the kids are adults without amending the will
2) the form authorizes short-term guardianship if the parents are sick
or out of town. I also include a caregiver affidavit so if someone other
than your nominated guardian is taking care of the kids and there is an
emergency, they can authorize medical care (or educational decisions in
longer absence cases).
Pet Trust Provisions. My standard recommendation is that if you have a pet, or may have a pet
at the time of your death, that you appoint a trusted party to care for
the animal. My form directs the person to keep the animal, or to find
an alternate situation for their care. I also recommend a pet support
gift because animals cost more as they age, and it is not to give the
adoptive parents some support.
Gates Memo. This is an attachment to the trust for gifts of personal property and
updates to burial or cremation instructions. The purpose of this form
is that it can be amended easily without an attorney that way if gifts
are changed several times over the course of one's life, they don't
have to come back into the office (although I request a you email me a
copy so we have matching sets, no fee).
Property List and Agent Contact Information. It makes a trustees job a lot easier if they have list of what was owned,
not owned, and where the accounts are held. That way they are not shuffling
through paperwork trying to figure out if the person had life insurance.
I also include contact information for key persons in your life, having
a phone number or an email address to a couple of people in your spouse's
family can go a long way.
Asset Transfer Authorization and Certificate of Trust. This is a useful tool to quickly transfer property to the trust. It is
a letter that explains how to hold title to different types if accounts,
and has a synopsis of the trust, and your trustee's contact information
attached. I put a couple copies in the back so that as you age and get
new stuff, you can grab a copy and give it to the financial institution
or title company, and your property will be properly titled in the name
of the trust.
Medical Records Release. This form makes it possible for your agent to pick up medical records
on your behalf.
What is a trust?
A trust is a contract that tells title companies and financial institutions
that they do not need a court order to transfer title to assets on death.
Instead of a court order, the trustee will submit an affidavit that says
they are the trustee; they are taking control of the assets, and attach
a copy of the death certificate.
The trustee under a trust and an executor under a will have the same exact
responsibilities to beneficiaries, the only difference is whether the
probate court is overseeing the process or whether you trust your trustee
to act without supervision.
In trusts, the beneficiaries are "supervising" the trustee. The
trustee has to send the same notices and reports that are required under
the probate code. If a beneficiary suspects something is wrong, it is
their responsibility to request that trustee act differently.
When is a will and/or an estate plan most important?
Outside of the minor children and property issues discussed below, here
are my top six situations where the default rule doesn't work and
you need a contract:
You have a child with special needs. Parents who have children who are dependent and will be dependent on
the public benefits to care for their children, need to draft a special
needs trust for their child. This is because if you pass away and the
child inherits property, it will kick them off their benefits, then they
have to burn through the money and re-apply to get back on benefits. This
not only wastes the assets in the estate, but can cause a disruption in
services. Further, having a fund that can be used to allow your child
to buy Christmas presents for family, stay in a nicer place, receive non-covered
medications, or do some personal shopping adds a tremendous amount to
their quality of life.
You have a child with someone whose biological parent is abusive or otherwise
not suitable as a parent. The court will presume that the other biological parent is the best parent
for the child. If this is not the case, I strongly recommend that you
sign an affidavit detailing the problems and noting where police reports
or other evidence of the problem can be found.
You are not married, but want your significant other to inherit or make
decisions on your behalf. Many couples decide not to get married even after having kids and mixing
property. The state default rule is that your parents will be your executor,
health care agent, and financial agent. Doing an estate plan skirts the
issue of marriage while giving your partner the legal protections.
You are not married, and you have parents or adult children that do not get along. The state default is that your adult children or parents are the default
executor, health care agent, and financial agent. There are no clear rules
on what parent or child should be the agent. Designating someone can avoid
family feuds and keep everyone focused on the task at hand. *Marital couples,
please see the note below.
You are a same-sex couple that leaves the state of California. Other states are supposed to give full faith and credit to the laws of
other states, but that doesn't prevent individuals who are not comfortable
with same-sex couples from making things difficult. Having executed wills,
advanced health care directives, a power of attorney over finances, and
a guardianship agreement gives you the option to not even mentioned you
are married if you do not think it will help.
You are married, and you do not want to leave everything to your spouse. Make it clear in your will, and don't forget to provide something
for your spouse's support for the first year if they cannot support
themselves (spousal support does not end at death).**Note for second marriages.
*Note for married couples, if you still fall into the category of having
parents or adult children who do not get along, I highly recommend that
you put an estate plan in place so that your nomination for your back-up
agent is written down somewhere. Marital couples can get in joint accidents,
but more commonly, they die within a year of each other and it is uncommon
to update your estate plan while mourning the death of a spouse.
**Note for second marriages with a will executed before marriage. If you
are married, and want the will or trust you signed before your marriage
to work than once you marry, you need to sign a separate statement that
says you do not want to leave half your property to your spouse and you
do not want them to be executor, health care agent, or financial agent.
The state default rule is that there is a presumption that you forgot
to update your will.
California's Special Living Trust Situation
There is a lot of confusion around living trusts. Many clients hear from
friends and relatives that they do not need a trust. If you have real
property or kids (minors), don't listen to them. It is not that your
friends and relatives are totally wrong, but California has a special
set of rules that make living trusts much more important here than in
In California, the executor, executor's attorney and the probate referee
are entitled by statute to a percentage % of the value of the estate.
Because property values are so high in California the fees leaving the
estate are also very high (3%-7%). If the asset is in a trust, the fees
are based on hourly attorney work.
Let's consider an example of Josh and Rachel. Josh and Rachel and smart
people who hold title to their property as joint tenants with rights of
survivorship, they also have all beneficiaries designated on all of their
accounts to pay to their spouse first and then to their two kids. They
have a house in the mission worth approximately $900,000 with a mortgage
If Josh and Rachel were in an accident together or they get old and pass
without updating the title on the house to be in a trust, before the kids
get access to the money, here are the relative probate fees:
House: $27,000 (3% of the market value of the asset - no deduction for
the mortgage) to the attorney and Executor = $54,000 + Probate Referee
fees, publication, and filing and closings costs = ~$58,000.
To transfer title under a trust administration case would cost between
$2,500 and $5,000 (ten to twenty hours of attorney time at $250 per hour).
There are no filing fees or publications fees unless there are litigation
claims or or unknown creditors.
The percentage fee system is such a windfall for attorneys that my malpractice
insurance recommends that if my clients decide not use a trust and they
have real property, I send a separate written statement to my clients
specifically disclosing the fees an attorney would receive in a probate case.
When people in other states say you don't need a trust unless you are
incredibly wealthy, what they are discussing are trusts that protect the
estate against inheritance tax. That is generally true, but is not relevant
to families in California with real property. Even a small estate generally
has the family home as the primary asset and the percentage fee system
is rarely a fair or reasonable fee for these families.
What if I did not get my property in the trust?
It is very common for families to create a trust, put their home in the
trust, and then when they refinance, or buy another home, they forget
to put it back in the trust.
As long as there is evidence that this was unintentional, the best practice
is a Heggstad Petition. This petition asks the court to transfer the title
to property back to the trust without a formal probate. It can save clients
$30,000. I do these often and tell clients to plan on about ten hours
of attorney time plus the filing fee of ~$450.00. The petition can also
be used for financial accounts that were not titled in the name of the
trust (as long as there is some evidence that they were intended to be
in the trust.)
When do I not need a trust?
If you do not have real property or kids and you update all your beneficiaries
on your bank, retirement and life insurance, than I don't see a problem with it.
I recommend and believe it still polite and financially responsible to
do a will, health care directive and power of attorney over finances.
The will lets your family know who you want to be in charge of your funeral,
sorting out debts, and generally being in charge. This can be a big relief
if multiple parties want to take charge. The power of attorney over finances
serves the same purpose if you are disabled and makes it much, much, easier
for a caring friend or family member to help.
The advance health care directive lets your family or friends know who
you want to make health decisions on your behalf and some basic instructions
on what types of decisions you would want them to make.
Be sure to
contact a knowledgeable Oakland estate planning lawyer from Summerall Law, P.C. today. I provide free initial case consultations
for all potential clients. Download and review the corresponding
intake form before our meeting. Call now at (415) 275-3283!