What is the difference between a will and a trust?
A will and a trust are both legal documents that tell 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.
What is probate?
A probate is a court procedure required to clear title to assets any time you have more than $150,000 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 or beneficiary designations to avoid probate, but these forms of ownership have big issues, and should be used carefully. For example, if you have joint ownership, the other owner’s creditors can 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 does happen 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 can 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 quickly resolved when you die.
What planning is needed if I have a disabled child?
If the child is receiving or may receive means-tested (asset and income are counted) public benefits like SSI, Medi-Cal or Regional Center benefits, 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?
If you have a plan older than 2010 you need to come in right away, because the estate tax rules have changed dramatically. To ensure your estate plan is up to date, 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.
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 easily 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 get into 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.