What is an Estate?
An estate is used to describe all your worldly possession – all your real and personal property you own upon your death.
What is an Estate Plan?
An estate plan is simply that – a plan. It allows you to plan for yourself and loved ones in case of your death or if you suffer a disability. It allows the life of your loved ones to continue as smoothly as possible because you have given clear directions on how to proceed in disposing your assets upon your death. An effective estate plan will also avoid probate costs and estate tax through the use of several types of trusts.
What happens if I die without an Estate Plan?
You can think of the state as already creating an estate plan for you if you die without one. Gifts that you intend certain friends to receive will not be received by them. You will pay an exorbitant amount in probate costs and estate and gift tax if an effective estate plan is not created.
What’s involved in creating an Estate Plan?
I am sure you heard the answer before – it depends. It depends on how large your estate is, the type of property you own, whether you are married, divorced, have children and grandchildren. At the very least, EVERYONE should have a will. It may not avoid probate. However, it will allow YOU to make the decision on who should be benefited upon your death.
What is a will?
A will is a document in which a person provides for the disposition of his or her property upon death. If you draft a will, not all property will pass under your will. Property owned in joint tenancy, property held in a trust or in a custodial or P.O.D. account, life insurance proceeds, employee death benefits, and community property are some examples that do not pass under the will.
Why is a will important?
Regardless of the size of the person’s estate, if you wish to avoid the passing of your property through intestate succession, you should have a will. Intestate Succession is the passing of property under the state intestate laws upon the death of a person who dies without a valid will.
Even of you have created a living trust or hold property in joint tenancy, a will is necessary to catch the assets you may not have included in your trust.
The important fact that everyone should know is that property that passes under the will is subject to probate. Depending on the size of your estate, you may be taxed heavily. For this reason, we try to create effective estate plans to avoid probate and estate tax on your assets.
What is Probate?
The proof that a will is valid and that its terms are being carried out. Probate is accomplished by an executor/executrix who is paid a fee based on the size of the estate that passes through the will. Certain trusts and jointly owned property pass to beneficiaries without being subject to probate and the attendant fee.
How can Probate be avoided?
Probate can be avoided by creating an effective estate plan. Anything that doesn’t pass under your will will not be subject to probate. Such property may be property that you placed in a living trust.
What is a Trust?
A legal arrangement whereby control over property is transferred to a person or organization (the trustee) for the benefit of someone else (the beneficiary). Trusts are created for a variety of reasons, including tax savings and improved asset management, and when it comes to estate planning, the avoidance of probate.
In many states, including California, the creator of the living revocable trust is usually allowed to act as the trustee in the administration of the trust. Therefore, the creator of the trust should not fear that control over their property is being given to someone else.
Why do I need a Trust?
Trusts are widely used in estate planning. Although they are more frequently used in larger estates, they may also be used effectively in smaller estates. Depending on the type of assets you own and how much your estate is worth, you may save in probate costs and possibly estate and gift tax.
How is a Living Trust different than a will?
A living trust is different than a will in many respects:
1. It avoids the expense of probate – since property that’s held in a revocable trust doesn’t pass under the will, it is not included in the probate estate. Therefore, it’s not subject to attorneys fees, personal representative’s fees, and other associated expenses.
2. It avoids the delay of probate – probate proceedings can be drastically long (anywhere from 4 months to 3 years depending on the size of the estate). If property is contained in a trust, it avoids these lengthy proceedings and allows your wishes carried out immediately upon your death.
3. It avoids the need for ancillary probate – if you own property in another state, and such property is contained in the will, a separate probate proceeding shall take place in the state in which the property is located. Having such property in a trust avoids these ancillary probate proceedings.
4. It maintains the privacy of the testamentary process – although it is not entirely important to many people, wills are considered public record and may be viewed by anyone for any reason. However, property contained in a revocable trust is not considered a matter of public record.
5. It avoids will contests – Wills are easy to contest and they are regular occurrences in most probate courts. However, a revocable trust is difficult to overturn and challenges seldom occur.
6. It can protect the settler in the event of disability – a revocable trust along with a durable power of attorney can provide for the settlor’s needs if the settlor becomes disabled or is unable to manage his or her affairs.
7. It may provide protection from creditors – since a revocable trust is not subject to probate, it is not directly subject to claims of settlor’s creditors. Although it can be reached by an aggressive creditor, the difficulty of process discourages many creditors.
8. It provides for continuity of management – Since the settler may select a trustee, it can provide for continuity of management of the trust leading up to and following the settlor’s death.
What is a Living Will?
A living will is a document where you specify the conditions where your life shall not be artificially extended by the use of life-sustaining procedures and the person shall die in the normal course of events.
What is a Power of Attorney?
There are several types of power of attorneys: general power of attorney, durable power of attorney and springing power of attorney. Generally, a power of attorney is a document in which you allow another to act on your behalf. You can define the scope in which the agent may act for you, i.e., signing checks, making health care decisions, running the business in your absence.
Why do I need a Durable Power of Attorney?
A durable power of attorney is a document in which you appoint an agent to act for you should you become disabled or incapacitated. You are considered the principal. Some fear that the agent will use his or her power of attorney to perform acts not to the principal’s liking. Therefore, state statutes created what is called a “springing power of attorney.” This is a durable power of attorney in which it only becomes effective once you are disabled or incapacitated.
A power of attorney is usually used in cases where you would like someone to make decisions with respect to your health care and financial management. If you own a business and have someone in mind that can continue the business efficiently, you may appoint him as your agent should be become disabled or incapacitated.
How often should I review my estate Plan?
You should review your estate plan once year. However, it should also be reviewed upon the happening of a significant event, such as the purchase or sale of property, or the start-up of a business.
At the Law Offices of Alon Darvish, we work diligently to seek optimal results for each of our valued clients. Each case is handled personally by attorney Alon Darvish. We represent clients in a wide range of legal matters. Through a team approach we are committed to providing a higher level of service to each of our valued clients. Our Law Firm stress integrity, honesty and good old-fashioned personal service.
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Attorney at Law
9454 Wilshire Boulevard
Beverly Hills, CA 90212
9454 Wilshire Boulevard, Penthouse Floor, Beverly Hills, California 90212
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