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Estate Planning

Estate Planning

Proper estate planning can be complex. Different clients have different needs, therefore, not all estate plans are the same. A good estate plan will incorporate your needs, your family’s needs, your assets, your wishes, and intent. At the Law Offices of Suzanne M. Graves, Inc. we take the time to get to know you and your family, along with your unique wishes in order to custom build your estate plan to meet your wishes and suit your family’s needs. In recent years, our office has seen the rise of “Cookie Cutter” Estate Plans that can be purchased online and filled out independent of legal advice. Our office has reviewed many of these estate plans and have found them to be lacking in some of the most basic protections that a proper estate plan should include. Don’t be fooled into saving a little bit of money for an ineffective and costly mistake. Our office will work closely with you to make sure you are completely happy with your estate plan. Contact us today for a free evaluation of your estate planning needs. If you already have an estate plan, we are happy to review that plan at no charge to make sure it fits your current family situation.

Please use the probate fee calculator to estimate Probate attorney’s fees and executor commissions for the administration of estates valued over $166,000, but less than $25,000,000. A reasonable amount is determined by the court for amounts above $25,000,000.

Estate Planning FAQ

What are the advantages of completing estate planning during life?

Avoidance of Probate

  1. Saves on probate fees and costs
  2. Avoids the delay in asset transfer that is common with probate
  3. Avoids public record (probate proceedings are public proceedings)
  4. Avoids will contests

Non-Probate Advantages of living trusts

  1. The trust can be terminated or amended by the Settlors at any time before death.
  2. Spendthrift Provisions make it so the property that is held in the trust for the benefit of the children cannot be reached by the children’s creditors as long as the property is held in the trust.
  3. The trust provides for incapacity of either spouse to keep loved ones from a conservatorship action in the event of incapacity.
  4. Holdback Provisions permit the parents to keep the assets that are held in the trust from being distributed to the children until they reach a certain age that the parents believe the child will be able to manage the assets responsibly.
  5. The trust can be setup so that when the first spouse dies their interest in trust property will be locked in to go where they intend it to in the event of remarriage or if the remaining spouse changes their mind about where they want their interest in the property to go.
  6. Holding assets in trust for a minor can avoid guardianship actions in the Court.
What do typical estate plans include?

Revocable Living Trust – Typical estate plans have a revocable living trust as their governing document.  This document is the heart of a proper estate plan and is where your wishes and intent for the planning are stated.

Pour Over Will – This is a will that states that any assets that were left outside the trust should be distributed according to the terms of the trust.  This helps if you pass away and you have property that was inadvertently not titled in the trust name prior to your passing.

Community Property Transmutation Agreement – Did you know that if you are married and your property is held as a community property asset, it will get a full step-up in basis on the first spouse’s death?  Furthermore, on the second spouse’s death, the property will again receive a full step-up in basis.  This means if the property is sold shortly after either the death of the first spouse or the death of the second spouse, there will be no capital gains tax due on the sale of the property.

Durable Powers of Attorney

Financial Durable Power of Attorney – this document states who is able to take care of your financial affairs for assets that are outside the trust name in the event of your incapacity.  It will also authorize the agent to file tax returns, speak with social security and speak with the medi-cal office.  Incapacity may result from a sudden accident or over time due to illnesses of age.  If there is not a financial durable power of attorney in place upon incapacity your loved ones will be required to go through the costly conservatorship process to manage your financial affairs and communicate with your financial institutions.

Advance Health Care Directive – this document states who is able to make medical decisions on your behalf in the event of your incapacity.  This document also states your end of life wishes (such as burial and funeral arrangements) so your appointed agent(s) can comply with those wishes.  Incapacity may result from a sudden accident or over time due to illnesses or age.  If there is not an Advance Health Care Directive in place upon incapacity, your loved ones will be required to go through the costly conservatorship process to make healthcare decisions on your behalf.  Sometimes these decisions are emergencies and cannot wait.  By having your Advance Health Care Directive in place, your loved ones will face less stress and will be more at ease in the event of your incapacity.

Medical Authorization – this document gives your healthcare provider permission to release medical information to your agent(s) in the event of your incapacity.  Healthcare providers require this to release medical information and records to your agent in the event of your incapacity due to the Hippa laws.  This document cannot be older than five years old.  This means this document should be updated frequently.

Anatomical Gift Form – if you wish to give an anatomical gift after your death, in the state of California, the gift is required to be made in a separate writing and witnessed by two independent witnesses.

Nomination of Conservator – this document is used to nominate a conservator in the event the Durable Power of Attorney documents fail for any reason.  This makes the process of opening a conservatorship much easier and less costly.  It also insures that the person who you want to act as Conservator is the person who gets appointed by the Court.  This is a safeguard that is found in proper estate plans.

Proper Maintenance of Your Estate Plan

Most people who create an estate plan feel a sense of relief once their planning is done.  However, they fall into a sense of false security and sometimes do not look at their estate plan again for years.  As a result, when they finally need their plan, it does not work properly.  Things change.  Assets change, family situations change, the law changes and the attorney’s experience change.  Therefore, it is a good idea to maintain your estate plan once it is in place.

Our office offers a formal maintenance plan.  For a small flat annual fee, you can have your plan reviewed and updated every year.  This keeps the overall cost of your plan low when it comes to administering the estate.

Advanced Estate Planning

Irrevocable Trusts

An irrevocable trust acts as a current gift and can be used to get rapidly appreciating items out of your estate currently so that they are not subject to estate taxes on your death.  Irrevocable trusts are also useful tools for life insurance planning.  Life insurance proceeds are includable in your gross taxable estate on your death.  By forming an Irrevocable Life Insurance Trust insurance proceeds that would normally be included in your taxable estate can be excluded from your taxable estate.  Irrevocable trusts can also be used for long term care planning to get assets outside of the estate for medi-cal purposes or for qualifying for the Veterans Aid and Attendance benefit.

Special Needs Trusts

An individual with special needs an individual that is receiving government assistance might receive money through an inheritance, gift, or a lawsuit settlement. If the individual were to take the funds outright and put them into their bank account that person would lose their government assistance because they would exceed their asset limits. To keep the individual on government assistance, we can form a Special Needs Trust. This Trust’s purpose is to supplement the income of the individual receiving benefits. This means that the person can take distributions from the trust to supplement their government benefits and provide for the things their benefits do not provide for.

Family Limited Partnerships

Family Limited Partnerships are an extremely complex area of estate planning law.  This is an effective vehicle for transferring a family business during the life of the settlor. Essentially, under federal tax law, a person can gift $15,000 per year to however many people that individual wishes. This means if there is a husband and wife both transferring assets they can transfer $30,000 per year to whomever they wish. When transferring property that is held by a family limited partnership, the settlor can take discounts for lack of marketability and lack of control this means that an even bigger share of the business can be transferred based on whatever percentage is determined for discounting purposes. Furthermore, at the death of the settlor, the settlor’s estate can take discounts for lack of marketability and lack of control that will discount the value the assets still held by the estate. All this discounting can be an effective way of reducing the family’s wealth to be under the lifetime estate tax exemption permitted by federal law.

Qualified Personal Residence Trust

A qualified personal residence trust (QPRT) is an irrevocable trust to which the trustmaker transfers his or her personal residence. The beauty of the QPRT is that while you give away the future value of the house, you retain the right to live there for a specified number of years. During this period, virtually nothing changes for you: You reside in the home just as you have always done. At the end of the term, however, the title to the house is transferred to your beneficiaries, usually children, in the manner that you determine at the time you create the trust.

Charitable Remainder Trusts

A charitable remainder trust (CRT) is an irrevocable trust in which the trustmaker and/or other designated noncharitable beneficiary (usually the trustmaker’s spouse) have the right to receive payments annually for a period of time, after which the balance of the trust principal is paid to the charitable beneficiaries designated in the trust. The CRT can be created and operational during the maker’s life or created at the death through a will or living trust.  In general, highly appreciated, low or non-income producing assets such as publicly traded stock with low dividend payments and debt-free real estate are the best assets to contribute. With a CRT, you can make a substantial gift to charity and receive an income tax deduction.

Charitable Lead Trusts

A charitable lead trust is an irrevocable trust in which a charity has the right to receive distributions from the trust for a period of time, after which the balance of the trust principal is paid to non-charitable beneficiaries. You receive an income tax deduction for the gift given to charity.

Qualified Domestic Trusts

A Qualified Domestic Trust (QDOT) is a special kind of trust that allows taxpayers who survive a deceased spouse to take the marital deduction on estate taxes, even if the surviving spouse is not a U.S. citizen. Normally, a U.S. citizen surviving spouse can take the marital deduction, but a non-citizen surviving spouse cannot. If you are married to someone who is a citizen of another country, it may make sense to use a QDOT.

Irrevocable Life Insurance Trust

If you own a life insurance policy or have incidents of ownership over a policy on your life when you die, the proceeds will be included in your estate and will be subject to estate tax. The way to avoid estate tax on your insurance proceeds is to have the policy owned by an Irrevocable Life Insurance Trust (ILIT). An Irrevocable Life Insurance Trust is a trust that holds life insurance as its principal asset. If the trust is properly drafted, it does not allow the insured to retain any incidents of ownership in the policy. The death proceeds are neither estate taxed in the estate of the insured nor income taxed to the beneficiaries of the trust.

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