Frequently Asked Questions
What is the difference between a will and a trust?
A will and a trust are both legal documents which indicate how you want your property distributed when you die. A trust avoids probate and a will does not. A trust also provides planning for incapacity and other benefits. Further, if you have had Medi-Cal usage, a trust will avoid estate recovery if the assets are vested in the trust, where assets which go through probate are subject to recovery.
What is probate?
A probate is a court procedure required to clear title to assets any time you have more than $166,250 worth of gross value. So if you have a house worth $500,000 and you owe $400,000, you will need a probate, because your estate is worth $500,000 gross. Sometimes you can use joint ownership, beneficiary designations, or transfer on death designations to avoid probate, but these forms of ownership or plans of succession have big issues, and should be used carefully. For example, if you own something jointly, the other owner’s creditors may be able to take that asset.
What does probate cost?
A lawyer is paid on a statutory fee schedule. The schedule pays the lawyer 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000, and a reasonable fee thereafter (presumably 1% of any amount over $1,000,000). On the $500,000 house above, the fee would be $13,000 just for the lawyer, and another $13,000 for the executor. Probate also requires high out-of-pocket costs for filing fees, appraisals, and so on, generally somewhere between $1,500 and $4,000 or more. A probate also takes at least a year to go through the court system.
Why do I need a Trust?
A trust avoids probate and the costs and fees noted above. A trust administration is required under the law when you die, but it is much less expensive. A trust provides a plan if you lose capacity and provides a line of successors who may be in charge if you are unable to manage your own assets. A trust protects you from the risks of joint ownership and can be resolved more quickly and less expensively when you die.
What planning is needed if I have a disabled child?
If the child is receiving, or may receive, means-tested public benefits like SSI or Medi-Cal (asset and income are counted), a special needs trust is the best way to plan for the child, and preserve the other public benefits which the child may rely on.
How often should I update my estate plan?
The laws are constantly changing. You should not sign an estate plan and stick it in a drawer to be pulled out only when you die. Circumstances change, and there are constant changes in the law. To ensure your estate plan is up to date, have an attorney take a look at it every two years or so, or any other time when there are changes of circumstances or changes in the law of which you are aware.
My spouse has to go to convalescent care. I was told I have to sell my house to pay for it. Is there anything I can do?
If your spouse is going into convalescent care, don’t listen to anyone other than a certified elder law attorney. The laws are in your favor and can be complicated but can be navigated by attorneys who know the laws. There are options for paying for care that do not involve selling your home or liquidating assets.
Isn’t it expensive to hire a lawyer?
It always costs to get good advice. The less you pay, the more likely there is a catch, either the person may be incompetent, may not even be a lawyer, or may want to control your investments or other assets. We will sit down with you and tell you honestly what it will cost, with no sales pitch or pressure, and we will explain the benefit to you or your family. We have decades of experience to provide you with the best advice.