Los Angeles Estate Planning Attorney

ESTATE PLANNING: FREQUENTLY ASKED QUESTIONS

WHAT IS PROBATE?
Probate is a court supervised legal process by which a deceased individual’s assets are eventually
transferred to their named beneficiaries or heirs. Probate determines the validity of the decedent’s will,
appoints an executor, provides notice of death to creditors, pays the decedent’s outstanding bills, and
distributes the remaining estate to the decedent’s beneficiaries. If the decedent does not have a valid will,
the court will appoint an executor and the assets will be distributed to the decedent’s heirs according to
state law.

WHAT ARE THE DISADVANTAGES OF PROBATE?
Probate proceedings routinely take from eight months to a year to complete and can be quite expensive.
Probate is also a public process in which the decedent’s heirs and the value of your estate become public
record.

HOW CAN PROBATE BE AVOIDED?
Probate can be avoided by creating and properly funding a revocable living trust.

Certain forms of ownership of property will also avoid probate (examples: joint tenancy and community
property with right of survivorship). However, such forms of ownership should be used with caution as
title to the property cannot be transferred to anyone else with your will and there can be unfavorable tax
consequences for appreciating assets held in joint tenancy. A competent estate planning attorney should
be consulted to advise the best strategy in light of your unique circumstances and estate planning goals.

WHAT IS A REVOCABLE LIVING TRUST?
Simply stated, a revocable living trust is similar to a will in that it sets forth how your assets will be
distributed upon your passing. However, unlike a will, a properly funded revocable living trust avoids
probate and the lengthy time and costs associated with probate.

In addition, a successor trustee(s) is named in the revocable living trust to manage your trust assets in
the event you become incapacitated, thereby eliminating the need for a court supervised conservatorship
regarding trust assets.

ARE THERE ADDITIONAL BENEFITS TO A REVOCABLE LIVING TRUST?
In addition to probate avoidance and planning for your potential incapacity, a revocable living trust offers
several further benefits.

1.       A revocable living trust can significantly reduce potential estate taxes for married couples.

2.        Depending on your wishes, a revocable living trust permits you to specify at what age and in what
amount your beneficiaries shall receive their distributions upon your passing. This can be a valuable tool
if a beneficiary, in your opinion, is not mature enough to manage their share of your trust estate due to age
or financial problems. For example, you might specify that a particular child is to receive ¼ of their share
at age 24, ½ of their remaining share at age 28, and the remainder of their share at age 32. Until that
particular beneficiary attains the required ages, their share is managed for them by the successor trustee.

3.        A revocable living trust may be amended (changed) or completely revoked (cancelled) at any time
during the lifetime of the creator(s) of the trust.

4.        A Special Needs provision can be included in a revocable living trust in order to preserve public
benefits for a disabled beneficiary (for example, Medi-Cal or Supplemental Security Income (SSI)). The
Special Needs provision would ensure that the value of the trust assets would not disqualify your disabled
beneficiary from public benefits; rather the trust assets would be used to supplement the beneficiary’s
public benefits.

5.        The creator(s) of a revocable living trust retain full control of trust assets, just as they would if the
trust did not exist. The creator(s) of the trust will file their normal 1040 IRS form since the trust asset
income will continue to be reported under their social security number(s).

WHAT IS A ADVANCE HEALTH CARE DIRECTIVE?
An Advance Health Care Directive names a trusted family member or friend to make health care decisions
for you in the event you are incapacitated and unable to do so yourself. This document also allows you to
provide detailed instructions concerning your health care, including anatomical gifts and end-of-life
decisions. An Advance Health Care Directive eliminates the need for a court appointed conservator of
your person.

WHAT IS A DURABLE POWER OF ATTORNEY FOR FINANCES?
A Durable Power of Attorney for Finances names a person or persons to manage your finances in the
event you are incapacitated and unable to do so yourself. This document authorizes the person(s) named
to pay your debts, file tax returns, buy/sell assets and apply for potential government benefits on your
behalf. Depending on your unique circumstances, you may also wish to authorize the person(s) named to
implement various Medi-Cal planning strategies to preserve your assets. A Durable Power of Attorney
eliminates the need for a court appointed conservator of your estate.

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