At the most basic level, estate planning is taking an inventory of your assets and deciding who will manage them upon your incapacity or death, and who should receive them after you pass away. Estate planning should not simply be the preparation of a fixed set of documents. Rather, a quality estate plan involves gaining an understanding of each asset that you own, understanding your concerns, values and family dynamics and creating a plan that accomplishes those objectives with thoroughness and flexibility. A good estate planning attorney will raise questions you never thought to ask, and help create a solution that provides you with peace of mind. Time and time again, we watch clients with surprise on their faces as we ask them questions that had never occurred to them to even consider. And just as often, they are so very glad that we asked.

It depends on what “much” is. If you own a home or other real estate, then the answer is almost always yes. If you have minor children or other dependents including family members with special needs or elderly parents that require your financial or caregiving support, again the answer is almost always yes. The vast majority of families in California need a trust to avoid probate or to efficiently accomplish their estate planning objectives. While the additional cost of setting up a trust is certainly a factor for some, when compared with the cost of not having one, it is typically by far the best option. The two general categories of people that may not need a trust include young adults that do not own real estate yet and elderly individuals that no longer own a home.

Even if you do not need a trust, you absolutely need a will and powers of attorney. Everyone over the age of 18 should have those very basic documents in place. Even if you didn’t have a penny to your name, having these documents in place would still be important because it would allow an individual to make medical decisions, sign you up for government benefits and other important legal rights.

Probate is a court supervised process for legally paying someone’s debts and distributing any remaining assets to their heirs upon their death. A main objective in probate avoidance is to plan so that when someone passes away, they have no assets held in their individual name (or their estate). If they do, then probate may be required unless the assets are very small, even if the individual had a will. If someone dies without a will, this is known as dying “intestate,” and the default rules under the state’s statute determine to whom your assets will be distributed.

More technically, probate involves filing a petition with the court to “open” a probate, publishing a notice in the newspaper, and have the court appoint an “executor” or “personal representative” of the estate. The terms are often used interchangeably, but technically an “executor” is appointed in a will and a “personal representative” is appointed by the court when there is no will. The executor or personal representative is responsible for formally notifying all creditors (and the public) of someone’s death, locating and gaining control of all of the assets belonging to the estate, valuing the assets and then paying off debts and distributing out the balance to the heirs. The total process takes approximately 9-18 months in California, sometimes longer. The primary reasons that people so strongly advocate for avoiding probate include the cost, the delay and frustration of the process for their loved ones, and the very public nature of it. If you leave only a will, anyone can look up how much you owed and to whom (credit cards, mortgages, etc.) and who you left your money to, or even who you specifically disinherited. A trust, on the other hand, if properly funded, can avoid probate. A trust is not “filed” or “recorded” anywhere unless it becomes disputed by your beneficiaries, as it is ultimately just a private agreement regarding the ownership and succession of your assets.

Furthermore, a traditional probate deals with your assets upon your death. Many people do not think about what would happen if they are unable to manage their finances during their lifetime. For example, if they were in a car accident, or had a stroke or a heart attack. A “living probate” or conservatorship is a court supervised process for putting someone in charge of your finances (and often also your health) if you do not appoint an agent in a power of attorney for finances and health care. This can frequently occur as someone ages and experiences cognitive decline such as dementia, Alzheimer's or other memory issues, or it can occur as a result of an accident or sudden illness. In addition to being a very public process during your lifetime, it is a very expensive process. Sometimes, people don’t really care how much probate will cost their heirs - but they should care very much how much a conservatorship will cost because it may leave little to no money left to care for them in the event they were still alive but unable to manage their financial affairs.

The typical timeframe is about eight to ten weeks. We have certainly completed estate plans on much shorter time frames such as in the event of a health emergency, and it has certainly taken much longer for more complex estates or when there are decisions that take individuals longer to consider. However, we find that eight to ten weeks is the ideal period of time to complete a comprehensive and thoughtful estate plan with regular meetings and time to review without too much time to put the important task on the back burner.

Unsurprisingly, we get this question often and it is certainly a fair one. The answer is, of course, it depends. We believe in transparency about our fees, and we provide our estate planning services on a flat fee basis. This means that you will always know what the cost will be before moving forward. We provide a free consultation for our estate planning services and make recommendations on a very individualized basis. For more complex estates or individuals, the cost will naturally be more. For individuals with few assets or little to no family complexities, the cost will be less. However, most families are not quite as simple as they first believe, and a good estate planner will know how to confirm the complexity (or not) of your planning needs.

Experience has taught us that having expert guidance in deciding what you need and why you need it is important. Perhaps even more important is having a plan that will work the way that it is supposed to when you need it most. We often see the plans that were put together for several hundred dollars, and it is sadly almost always a complete waste.

Estate planning is surprisingly complex, and the cost should reflect the quality of the estate planning that is completed. The old adage “you get what you pay for,” could not be more true. For more information about low-cost alternatives to estate planning, please first consider the guidance and warnings provided by the Attorney General.

One of our team members likens the cost of estate planning to home improvements or repairs. The repairs or improvements completed by a licensed professional who came from a trusted referral source have added value to the house and peace of mind. On the other hand, the DIY projects are more like a bandaid, have aspects to them you are not quite satisfied with or sure about, and leave you worried about whether they will hold up when you need them.

As a parting thought, one of our favorite quotes on this topic is: “You have no idea how inexpensive a good lawyer is until you’ve experienced the cost of hiring a cheap one.”

Absolutely. As long as you are alive and you have legal capacity, you may modify your estate planning documents. One exception might be an irrevocable trust, but those are primarily used in more complex tax planning and even those can be modified - although not without some hoops. Some changes to your estate plan will require an attorney to make modifications to your documents and will require that they be signed with the care and formalities as your original documents. However, most often the changes that people make are changes in their assets. With a trust, this very often does not require any update to the estate planning documents themselves, but merely to title the asset properly. We provide all of our clients with detailed instructions on how to title future assets, and remain available to answer questions and for periodic reviews.

Not necessarily.

An estate planning attorney does not need to know exact balances of every account or the value of every single asset, and those are going to fluctuate from day to day and year to year anyway. However, in order to create the best possible plan for you and your family, the attorney needs to have a good idea of the value, the debt and and the type of assets to align those with your overall plan. The type of assets can make a big difference in the plan that is created and the tax implications on your beneficiaries and especially for retirement planning in light of the new SECURE Act bill that became effective on January 1, 2020.

Some of our clients have substantial wealth, and some of them have very little wealth. Regardless of the size of the estate, there is always important planning to do. If it is not for tax efficiency, it might be for health care decisions, caring for minor children or beloved pets, or planning for end of life decisions. For individuals with less wealth, we often here “I don’t have much” or they may be hesitant to share asset values with us because they are embarrassed they don’t have more. The most important thing we can do is assure you that we are here to help you, not judge you. And the less money you have, the more important it becomes to protect it for you and your loved ones. If you have substantial wealth, we need to know that too.

No. Qualified retirement plans, life insurance policies and some other similar assets will pass by beneficiary designation. It may make sense for your trust to be the primary or alternate beneficiary of your retirement plan or life insurance, but it will be owned by you individually during your lifetime. This is one of many reasons why having a durable power of attorney for finance is so important. The powers granted by this document, rather than your trust, would allow someone else to manage your retirement account or life insurance in the event of your incapacity (provided it granted the authority to do so).

Another important point about retirement accounts and life insurance policies - they will be owned outright by the named beneficiary. We often see retirement accounts or life insurance policies with outdated (or completely lacking) beneficiary designations. We have seen ex-partners, deceased individuals or other unintended recipients. One of the most important things you can do is review and update your beneficiary designations frequently.

It is also important to give consideration to how a beneficiary is named. Minor children, individuals with special needs, or individuals who could predecease you (anyone) needs careful consideration by a qualified planner. Beneficiary designations are legal documents and not simple forms to be filled out by a financial advisor.

A Deferred Compensation Plan or Deferred Compensation Agreement is a form of “non-qualified retirement plan.” Ownership of a non-qualified retirement plan should not be changed or transferred to a revocable living trust. Rather, proper funding is typically achieved by changing the beneficiary designation to the employee’s trust (however, as noted below, there are sometimes limitations on beneficiaries).

The employee benefits or human resources department of the employer is typically a great resource for information and should be able to provide a copy of the plan agreement. A qualified estate planning attorney should review the plan agreement to determine whether a trust may be named as a beneficiary, or if the agreement limits who may be a beneficiary under that particular plan. If the trust can be named as a beneficiary, the employee benefits or human resources department should be able to provide the appropriate form to change the beneficiary designation. They may also need documentation to evidence the existence of the trust, such as a Certification of Trust.

Have you heard an accountant or advisor tell you or someone you know that the best practices is to have a “natural person” as the beneficiary for qualified accounts (retirement accounts), because it will give the beneficiaries more flexibility when they inherit the account? Is this good advice?

The short answer, maybe. The better answer, probably not.

This is one of the most important topics that we address in estate planning. We would strongly disagree with naming minor children directly as beneficiaries (even secondary beneficiaries). The trusts that we prepare for our clients with minor children have extensive provisions to address retirement accounts. Our trusts qualify as what is known as a "see through" trust and this addresses the concern that your accountant or advisor may have with naming a trust as a beneficiary. If children or other beneficiaries are all of the age where you would be comfortable with them owning the asset directly (at least 18) then you may want to name them directly as beneficiaries or alternate beneficiaries. One of the most important reasons why we would disagree with the recommendation for naming a beneficiary directly to inherit an account is where there are potential minor beneficiaries - most people don’t realize that minor children would have to have a court appointed guardian to access those funds, and an annual accounting to the court until they turn 18. Exactly what we are trying to avoid! In addition, beneficiaries with special needs, beneficiaries that predecease you or beneficiaries with other complications may cause significant issues if named to directly inherit a retirement asset. From a tax perspective, the advice being given by the advisor or accountant may be easier, from a planning perspective we can often achieve the best of both worlds.

The simple answer, YES! Using a trust, you can provide a gift or multiple gifts to anyone you want. You can also create a back-up plan in case the people you have chosen do not survive you. This is often referred to as a remote contingent beneficiary. This means that in the remote chance the people you would like to provide gifts for pass away before the distribution of your assets, the people, entity(ies), or charity(ies) that you name will receive your gift in the amount you decide.

In the alternative, you can just as easily disinherit someone using a trust. Please note that disinheriting someone should be taken very seriously and should be done with careful consideration and skilled legal counsel. Similarly, leaving assets to someone who is not seen as a natural distribution may raise some eyebrows and/or give reason for a challenge. Another good reason for qualified legal counsel.

Unfortunately, that is not correct. Without an estate plan, your assets - including your home (depending on how you hold title) could be given to your heirs, which in this case would be your estranged family, and your partner could end up losing you, their home and the life you have built together.

While this was a very specific example, we get some variation of this question all the time. We cannot emphasize enough the importance of informed and proactive planning.

Most estate planning packages include “incapacity planning documents,” wherein you can request specific actions happen, or do not happen to you while you are unable to communicate your wishes. Those documents can also be used to describe your wishes upon your death. Even if you do not have a formal estate plan, we highly recommend you put your requests in writing and explain to your family members and friends where the document is located, if this is something that is important to you.