Frequently Asked Questions
San Jose Probate & Estate Planning Lawyer
Estate planning can be complicated, so I have compiled a list of questions that my clients
often ask me. If you are wondering how to proceed with your case, then
please review the answers below.
Q. I have no estate. Is estate planning for me?
A. Absolutely. I like to think of estate planning as a type of emergency
preparation. A comprehensive estate plan generally includes documents
to protect against incapacity such as an advanced healthcare directive
and durable power of attorney. Establishing a
guardianship for minor children is also included in an estate plan.
Q. I'm not wealthy. Is estate planning for me?
A. Absolutely. There is a misconception that estate planning is only for
the wealthy. That's simply not the case. Parents with young children
will want to establish guardianships if something were to happen to them.
Protecting against incapacity and end-of-life health care decisions are
important choices that can be made through a properly designed estate
plan. Also, people like the simple idea of being able to control the disposition
of their assets rather than leaving it to the state's laws.
Q. I hear that I am supposed to avoid probate. What is probate and why
should it be avoided?
Probate is a legal process that determines the final disposition of your assets.
The probate process can be costly. It is also a public process –
opening the estate to litigation. Probate often lasts from several months
to a few years.
Q. I have a will, I'm good right?
A. Depends. A
will does not avoid probate. Therefore, while you have expressed your intentions
via your will, the administration thereof could be onerous, expensive
Q. What is a living trust?
living trust is a legal document that provides instructions for what you want to happen
to your assets when you die. It can avoid probate, unlike a will, and
it prevents the court from controlling your assets if you become incapacitated.
There are three parties to a property executed trust –
Grantor – Also called Settlor or Trustor, this is the person who creates the trust,
and usually the only person who provides funding for the trust. More than
one person can be a grantor of a trust, such as when a husband and wife
Trustee – This is the person who holds title to the trust property and manages
it according to the terms of the trust. Generally, the grantor also serves
as the trustee during his or her lifetime.
Beneficiary – This is the person designated by the grantor to receive the income or principal
from the trust.
In order to be operable, the trust must contain assets or property. In
other words, the trust must be funded. The funding process involves transferring
assets from the grantor to the trustee. The trustee then holds the assets,
manages them, and eventually distributes them according to the trust provisions.
Q. Is a living trust expensive?
A. Not when compared to all of the costs of court interference at incapacity
or death. The cost of establishing a trust depends entirely on the complexity
of the estate, the grantor's goals, and the extent to which the trust
Q. Should I have an attorney draft my trust?
A. Yes. Most people don't cut their own hair or perform their own
surgeries. Estate planning and trust drafting is a skill. A local attorney
who has considerable experience in living trusts and continually updates
his or her knowledge base will give you valuable guidance to property
complete your estate plan.
Q. What is a Trustee? Who should be mine?
A. It is common for the Grantor to also perform the role of Trustee while
the Grantor is alive, willing, and able. Nominating a Successor Trustee
is arguably the most important decision when planning your estate. This
person can be an adult child, other family member, friend, or a corporate
fiduciary. The Successor Trustee should be someone you trust who will
carry out your wishes.
Q. Should my Trustee be paid?
A. Yes. The process of administering your trust could be difficult and
time-consuming. Your trustee should be entitled to reasonable compensation.
Q. I'm the Successor Trustee of my mother's trust. She recently
passed away, what now?
A. You are responsible for administering the trust and fulfilling your
mother's wishes. Some of your responsibilities include paying creditors,
paying taxes, determining the distribution of assets, keeping records
for any estate –related expenditures. Although hiring an attorney
is not necessary, it is highly recommended. A qualified attorney will
guide you through the process and make sure you are fulfilling your fiduciary
Q. I'm getting a divorce, what happens to the trust I established with
my soon-to-be ex-spouse?
A. Although a judgment dissolving the marriage or Registered Domestic
Partnership automatically revokes an existing will and trust, the act
of physical separation or the filing of a dissolution petition alone does
not. Generally, the estate plan during the separation stage prior to the
final marital dissolution does not represent the grantors' wishes.
While unlikely, if a death occurs during this time, the estate planning
documents control the distribution of the estate. Thus, it is crucial
make changes to the estate plan to reflect the grantors' current intentions.
Q. Can I modify my trust if there are changes in circumstances?
A. A revocable living trust can be amended as often as desired. People
like the flexibility of the living trust to be able to make changes if
life events call for it.
Q. How long does it take to set up a trust?
A. Generally, it depends on your willingness and ability to provide the
attorney with the requisite documents and information. It shouldn't
take the attorney more than a few weeks to draft the documents and prepare
them for signing.
Q. Does my trustee also make health care decisions?
A. Not necessarily. Your health care agent would make health care decisions
for you if you become incapacitated. The instructions for your health
care agent are found in your advanced healthcare directive – also
known as your power of attorney for health care decisions.
Q. What about a power of attorney? How does that fit into my estate plan?
durable power of attorney is an important document in your estate plan that gives someone authority
or the right to exercise powers that you already have. For example, you
currently have power to spend money, withdraw money from bank accounts,
enter into contracts, etc. In essence, you are granting someone else this
power. If this power is not in place, a loved one will likely be forced
to petition the court to be appointed conservator or guardian.
Q. What is trust funding and why is it important?
A. Trust funding refers to the process of transferring assets into the
trust. Funding consists of drafting deeds to effectuate the transfer of
real property, re-titling brokerage accounts, re-issuing stock certificates,
etc. Many attorneys opt to assist their clients with this process to ensure
the trust is properly funded. At the Law Offices of Timothy D. Henry,
Timothy and his staff assist in the entire funding process.
Q. What assets should be owned by the trust?
A. Real estate, stocks, CDs, bank accounts, brokerage and investment accounts,
insurance, other assets with titles. Most living trusts also include jewelry,
clothes, art, furniture, and other assets that do not have titles.
Q. Does my revocable living trust reduce taxes?
A. Perhaps. Your estate will have to pay federal estate taxes if its net
value when you die is more than the exemption amount at that time. Congress
recently enacted the American Taxpayer Relief Act of 2012 and set the
exemption amount for estate tax purposes at $5,120,000 and indexed for
inflation. Thus, if the net value of your estate is less that the exemption
amount, you will not owe any taxes. If you are married, your living trust
can include a provision that will let you and your spouse use both exemptions,
saving a substantial amount of money for your loved ones.
Need an attorney for estate planning in San Jose?
If you have any more questions about your specific situation, then please
don't hesitate to
contact my firm, Law Offices of Timothy D. Henry. As a San Jose probate and estate planning
lawyer, I can analyze your situation and find favorable solutions. Start
by filling out a
free case evaluation!