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 nine 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
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
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 additional 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 one-half
of their share at age 21, and the balance at age 25. Until that particular beneficiary attains the required
ages, their share is managed for them by the successor trustee. Of course the successor trustee often
has authority to access the child's share to pay for the child's expenses (such as education and living
expenses) regardless of the child's age.
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). In short, the creators of the
trust are still the owners of trust assets.
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 end-of-life decisions
and anatomical gifts. 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 provide authority to
your named agent(s) to implement various Medi-Cal planning strategies to preserve and protect your
assets. A Durable Power of Attorney eliminates the need for a court appointed conservator of your
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**This information is designed to provide a general overview with regard to the subject matter. It is not intended, nor should it be interpreted as legal advice.
Use of this web site does not create an attorney-client relationship. You should consult an attorney for individual advice regarding your particular situation.
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