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Frequently Asked Questions

  1. What is Estate Planning?

  2. What happens if you die without a Will?

  3. What does a Will do?

  4. What doesn't a Will do?

  5. How do you execute a Will?

  6. What is a Revocable Living Trust?

  7. What is Probate?

  8. Should you avoid Probate?

  9. How do I title accounts?

  10. How do I sign my name in a fiduciary capacity?

  11. Where do I hold the Estate or Trust assets?

  12. How (and how much) do I get paid?

  13. What if a Beneficiary complains?

  14. Can I be sued or be held personally liable?

  15. How am I discharged as fiduciary at the end of the administration? What if I want to resign?

  16. What is an A-B Trust?

  17. What is a Qualified Terminable Interest Trust (QTIP)?

  18. What is a Durable Power of Attorney for Financial Management, and why do I need one?

  19. What is an Advance Health Care Directive?

  20. What is your fee structure?

  21. Do you offer a complimentary consultation?

  22. Should I name my Trust as the owner of all my assets?

  1. What is Estate Planning?

  2. Estate planning is a process involving the counsel of professional advisors who are familiar with your goals and concerns, your assets and how they are owned, and your family structure. It can involve the services of a variety of professionals, including your lawyer, accountant, financial planner, life insurance advisor, banker and broker. Estate planning covers the transfer of property at death as well as a variety of other personal matters and may or may not involve tax planning. The core document most often associated with this process is your will.

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  3. What happens if you die without a Will?

  4. If you die intestate (without a will), your state's laws of descent and distribution will determine who receives your property by default.  These laws vary from state to state, but typically the distribution would be to your spouse and children, or if none, to other family members.  A state's plan often reflects the legislature's guess as to how most people would dispose of their estates and builds in protections for certain beneficiaries, particularly minor children.  That plan may or may not reflect your actual wishes, and some of the built-in protections may not be necessary in a harmonious family setting.  A will allows you to alter the state's default plan to suit your personal preferences.

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  5. What does a Will do?

  6. A will provides for the distribution of property owned by you at the time of your death in any manner you choose (subject to the forced heirship laws of some states that prevent disinheriting a spouse and, in some cases, children).  Your will cannot, however, govern the disposition of properties that pass outside your probate estate (such as certain joint property, life insurance, retirement plans, and employee death benefits) unless they are payable to your estate.

    Wills can be of various degrees of complexity and can be utilized to achieve a wide range of family and tax objectives.  If a will provides for the outright distribution of assets, it is sometimes characterized as a simple will.  If the will establishes one or more trusts, it is often called a testamentary trust will.  Alternatively, the will may leave probate assets to a preexisting inter vivos trust (created in your lifetime), in which case it is called a pour over will. In either case, the purpose of the trust arrangement (as opposed to outright distribution) is to ensure continued property management and creditor protection for the surviving family members, to provide for charities, and to minimize taxes.

    Aside from providing for the intended disposition of your property to spouse, children etc., there are a number of other important objectives that may be accomplished in your will.

    • You may designate a guardian for your minor child or children if you have survived the other parent and, by judicious use of a trust and appointment of a trustee, eliminate the need for bonds and supervision by the court regarding the care of each minor child's estate.
    • You may designate an executor of your estate in your will and eliminate the need for a bond; in some states the designation of an independent executor will eliminate the need for court supervision of the settlement of your estate.
    • You may choose to acknowledge or otherwise provide for a child (e.g., stepchild, godchild, etc.) in whom you have an interest, an elderly parent, or other individuals.
    • If you are acting as custodian for the assets of a child or grandchild under the Uniform Gift (or Transfers) to Minors Act, you may designate your successor custodian and avoid the expense of a court appointment.

    Good planning can also enhance your support of religious, educational, and other charitable causes.

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  7. What doesn't a Will do?

  8. A will does not avoid the probate process in California, and it does not govern the transfer of certain types of assets, called non probate property, which by operation of law or contract pass to someone else on your death.  For example, real estate and other assets owned with rights of survivorship pass automatically to the surviving owner.  Likewise, an IRA or insurance policy payable to a named beneficiary passes outside the will.

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  9. How do you execute a Will?

  10. Wills are signed in the presence of witnesses and certain formalities must be observed.  A later amendment to a will is called a codicil and must be signed with the same formalities.  In some states, the will may refer to a memorandum disposing of tangible personal property, such as furniture, jewelry, automobiles, etc., which may be changed from time to time without the formalities of a will.  In many states, a will that is formally executed with the signatures notarized is deemed to be self proved and may be admitted to probate without testimony of witnesses or other additional proof.

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  11. What is a Revocable Living Trust?

  12. Much has been written recently regarding the use of "living trusts" (also known as a "revocable trust" or "inter vivos trust") as a solution for a wide variety of problems associated with estate planning through wills.  Some attorneys regularly recommend the use of such trusts, while others believe that their value has been somewhat overstated.  The choice of a living trust should be made after consideration of a number of factors.

    This brief summary is intended to provide a framework of basic knowledge regarding "living trusts" in general, in order that you might determine whether you should pursue a discussion of this technique further with your attorney licensed to practice in the state where your estate would be administered.

    The term "living trust" is generally used to describe a trust (a) which you can create during your lifetime, and (b) which you can revoke or amend whenever you wish to do so.  You can also create an "irrevocable" living trust, but that is permanent and unchangeable and is almost exclusively done to produce certain tax results beyond the scope of this summary.

    A "living trust" is legally in existence during your life, has a trustee who is currently serving, and owns property which (generally) you have transferred to it during your life.  While you are living, the trustee (who may be you) is generally responsible for managing the property as you direct for your benefit.  Upon your death, the trustee is generally directed to either distribute the trust property to your beneficiaries, or to continue to hold it and manage it for the benefit of your beneficiaries.  Like a will, a living trust can provide for the distribution of property upon your death.  Unlike a will, it can also (a) provide you with a vehicle for managing your property during your life, and (b) authorize the trustee to manage the property and use it for your benefit (and your family) if you should become incapacitated, thereby avoiding the appointment of a guardian for that purpose.

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  13. What is Probate?

  14. At death, your will goes through probate. Probate simply means the process by which your last will is determined to be your final dispositive statement and which confirms the appointment of the person or institution you have named to administer your estate.  The term probate is also used in the larger sense of probating your estate. In this sense, probate means the process by which assets are gathered, applied to pay debts, taxes and expenses of administration, and distributed to those designated as beneficiaries in the will.  The executor or personal representative named in the will is in charge of this process, and probate provides an orderly method for administration of the estate.  The executor is held accountable by the beneficiaries (and sometimes is supervised formally by a probate court).  The executor is entitled to a reasonable fee or commission.  Probate law generally encourages or provides for partial distribution during the period of administration; assets may generally be distributed in kind rather than sold during this time.  The tax laws generally focus the responsibility for death tax filings and payments on the executor under a will.  Thus, the choice of an executor is an important one.

    The basic job of administration and accounting for assets must be done whether the estate is handled by an executor in probate or probate is avoided.  In the recent past, lawyers and other professionals have advocated the use of probate avoidance techniques (including revocable trusts) in states where the probate process was perceived as being too slow and too costly.  Many states have simplified or streamlined their probate processes over the years.  In such states there is now less reason to employ such probate avoidance techniques.

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  15. Should you avoid Probate?

  16. The living trust is often marketed as a vehicle that allows you to "avoid probate" upon your death.  Probate is the court-supervised process of transferring property at death pursuant to the terms of a will.  Many types of property routinely pass outside of the probate process.  These include:

    • life insurance or retirement plan proceeds which pass to a named beneficiary rather than your estate
    • real estate or bank or brokerage accounts held in joint names with right of survivorship

    While it is true that the property passing under the terms of a living trust upon the death of the maker of the trust will "avoid probate," it should be noted that there may or may not be actual value in that result. Probate laws are different in every state.  In some states there are statutorily mandated court or attorney fees while in others those fees may be minimal. Many states have expedited or simplified court proceedings that are efficient and inexpensive for small or simple estates.  A properly drafted will in many states can eliminate some of the steps otherwise required in the probate proceedings.  In addition much of the delay and red tape customarily associated with probate is a result of the tax laws and tax filing requirements, which can not be eliminated through a living trust and the avoidance of probate.

    A living trust can almost never totally avoid probate and a simple will is needed to "pour over" to the trust any property that has not been transferred to the trust during life.

    Property that passes at death through a revocable living trust must first be transferred to the trust, administered by a trustee who may or may not charge fees, and then transferred out of the trust to the beneficiary.  These costs and the costs associated with tax filings are often ignored by living trust marketers.  There may be other costs as well depending upon the jurisdiction, such as real estate transfer taxes.  The comparison of cost between probate and a living trust should be made on a case by case basis.

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  17. How do I title accounts?

  18. Each bank or investment firm may have its own format, but generally you may use, for a trust, "Alice Carroll, Trustee, Lewis Carroll Trust dated January 19, 1998," or, in a shorthand version, "Alice Carroll, Trustee under agreement dated January 19, 1998." For an estate, "Alice Carroll, Executor, Estate of Lewis Carroll, Deceased."

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  19. How do I sign my name in a fiduciary capacity?

  20. An executor signs: "Alice Carroll, Executor (or Personal Representative) of the Estate of Lewis Carroll, Deceased". A trustee signs: "Alice Carroll, Trustee".

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  21. Where do I hold the Estate or Trust assets?

  22. If you engage a trust company, they will open an account in the name of the estate or trust and provide regular statements showing all income and disbursements.  You can open an investment account with a bank or brokerage company in the name of the estate or trust.  All expenses and disbursements must be made from these accounts, and you should receive regular statements

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  23. How (and how much) do I get paid?

  24. Fiduciary work is time-consuming and can be difficult; it is appropriate to seek payment for your services.  The will or trust agreement may set forth the compensation.  If they do not, many states provide either a fixed schedule to which you must adhere, or allow "reasonable" compensation, which usually takes into account the size of the estate, the complexity involved, and the time spent by the fiduciary.  Executor's or trustee's fees are taxable compensation to you. As stated above, several states do not permit the fiduciary to pay his or her own compensation without a court order; check with your attorney before you write yourself a check.

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  25. What if a Beneficiary complains?

  26. Even professional fiduciaries, such as trust companies, receive complaints from time to time.  The best way to deal with them is to do your best to avoid them in the first place by following these guidelines and consulting with an attorney experienced in estate administration.  Many complaints arise because beneficiaries are not kept up to date on the administration of the trust or estate.  Frequent communication with beneficiaries is a must.  Whenever possible, consult with an attorney who specializes in trust and estate matters when a complaint involves more than routine issues.

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  27. Can I be sued or be held personally liable?

  28. Your errors or mismanagement of a trust and estate can indeed subject you to personal liability.  Common pitfalls include not paying tax or filing returns on time, improper investment choices (whether too conservative, too speculative, or favoring one beneficiary over another), self-dealing (buying assets for yourself or your family from the estate or trust, whether or not at market price), or allowing property or casualty insurance to lapse, resulting in a loss to the account.  Your best protection is to get good professional advice and to fully document your actions and decisions.

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  29. How am I discharged as fiduciary at the end of the administration? What if I want to resign?

  30. Whether you stop acting because the estate or trust has terminated, or you wish to resign before the conclusion of your administration, you must be discharged, either by the local court or by the beneficiaries.  In some states, this is a formal process, involving the preparation of an accounting. In others, a relatively simple document signed by the beneficiaries can be used.  If you are resigning prior to the conclusion of your administration, check the document to see who succeeds you as fiduciary.  If no successor is named, you may need a court proceeding to appoint a successor before you can be discharged.

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  31. What is an A-B Trust?

  32. With a typical A-B living trust, the property contributed to the trust by the first grantor to die will be distributed to his or her beneficiaries when the surviving grantor dies. The surviving grantor cannot change the beneficiaries of the deceased grantor's trust property.

    The trust gets its name from the fact that it splits into two upon the first spouse’s death – trust A (the survivor's trust) and trust B (the decedent’s trust or exemption or credit shelter trust.)

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  33. What is a Qualified Terminable Interest Trust (QTIP)?

  34. The qualified terminable interest trust or QTIP trust is established to provide a surviving spouse with lifetime income that is earned by the assets that are transferred to the trust.  When the surviving spouse passes away, the assets within the trust will pass to the beneficiaries that are named within the trust instrument.  The surviving spouse cannot change beneficiaries of this trust.

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  35. What is a Durable Power of Attorney for Financial Management, and why do I need one?

  36. This document allows your agent to manage non-trust assets (i.e., anything held in your name as an individual, such as your personal checking account or IRA account) upon your incapacity; the powers granted by this document expire upon your death.

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  37. What is an Advance Health Care Directive?

  38. The advance health care directive allows your agent to make health care decisions on your behalf and expresses your desires regarding life support, burial, cremation, etc.

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  39. What is your fee structure?

  40. Many services are provided on a flat fee basis, others at an hourly rate. We discuss our rates in advance of any planning commitment.

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  41. Do you offer a complimentary consultation?

  42. We realize you have many choices when selecting an attorney. We offer a complimentary one-hour consultation for estate planning so you can "test the waters" and determine if our approach suits your needs. 

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  43. Should I name my Trust as the owner of all my assets?

  44. The simple answer is no.  The assets that need to be transferred to the trust's ownership are determined by the client and attorney during the estate planning process.

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