Frequently Asked Questions

 

Will or Trust?

 The Trust is the only Estate Plan that does not require Court involvement. A Will still requires the Executor to go through the Court Probate Process that can last years.

Any beneficiary designations on financial accounts or joint tenancy for real estate are not affected by the Will (the beneficiary designation and joint tenancy overrides the Will.)

 Gift v. Primary Beneficiary?

Gifts can be a set amount of cash, a personal item, or real property.

Gifts are distributed first and satisfied “off the top”, with the remainder going to the primary beneficiaries allocated out of 100% (e.g. 50%, 20%, 30%.)

If I am establishing a Trust, why do I also need a “Will”?

The Pour Over Will is complimentary and “part and parcel” of the Trust. One of the main purposes is to act as a “catch-all” by declaring that all property not held in trust at the time of passing is deemed to be transferred and held in Trust.

 What is the Difference Between a Trustee, Executor and Guardian?

The Trustee is responsible for administering (i.e. ensuring the written wishes are effectuated) the terms of the Trust. The term Trustee is exclusive to the Trust.

The Executor is responsible for administering the terms of the Will. The term Executor is exclusive to the Will.

The Guardian is the person you nominate to take over the parental responsibilities for your minor child(ren) in the event you pass prior to the child(ren) reaching 18.

Does the Trustee, Executor, and Guardian have to be the Same Set of Individuals?

Usually the Trustee and Executor is same individual in the same order/sequence.

The Guardian often is the same as the Trustee/Executor as it is administratively more efficient (no splitting of the power of the purse v. responsibility of day-to-day care among different individuals).

Who Should be the Successor Trustee or Executor?

While alive the settlor(s) or sometimes referred to as grantor(s) (individual establishing the Trust) will also be the Trustee.

For the post death successor Trustee/Executor, the settlor(s) will often look to qualified family members. (When spouses involved the surviving spouse is the first Successor Trustee/Executor.) Ideally the successor Trustee/Executor will be well organized and have a good grasp of financial and/or legal matters. The successor Trustee/Executor will be able to consult an attorney or CPA if he or she requires assistance regarding the Trust or Will administration.

Nominating a Non-U.S. citizen/resident spouse or relative should only be in conjunction with naming also a U.S. resident as co-trustee (2 Trustees acting together).

What Type of Compensation is Common for the Trustee?

While there is no set standard, commonly reasonable compensation, or an annual fee ranging from 0.5% to 5% of asset, depending on size of assets, prorated by number of days served.

Disclaimer

Probate Hack – Spousal Property Petition

If a Spouse dies and there is a financial account or real property still in the name of the deceased spouse, and no succession mechanism was established or is otherwise available, the surviving Spouse can petition the Probate Court for a one time hearing with a Spousal Property Petition (avoiding the full Probate Court Estate Administration process.)

In most cases, the surviving Spouse will have to establish that the deceased Spouse’s property was community (marital property) as opposed to separate property.

The Spousal property petition is only available for the surviving Spouse or Domestic partner. It is not available for the surviving children, other relative, or other interested parties.

Disclaimer

Probate Hack – Remove Power of Attorney

If a family member, friend, or third party acting as power of attorney (agent) fails to act in the best interest of the principal (person delegating authority to the agent), there is the option to bring the matter to a judge in Probate Court under Probate Code Sections 4541 and 4545, forcing the removal of the Power of Attorney who is breaching his or her fiduciary duties.

In addition to the removal of the power of attorney, the petitioning party can ask that the Court to order an accounting, recognize a new successor power of attorney, and compel the removed bad faith power of attorney to pay the petitioning party’s court related attorney fees.

Having a specific determination on the Power of Attorney is less complicated and costly than instituting a conservatorship.

Disclaimer

Who Inherits if No Trust or Will?

If a person dies in California without a Trust or Will, then Probate Code Sections 6400-6455, intestate succession, dictates the succession disposition.

The attached Chart of Consanguinity details the various scenarios whereby the offspring of a predeceased direct bloodline relative can inherit by “right of representation.”

For example, the parents have two children, and one of the children predeceased, leaving two grandchildren. Under the California Probate Code, the two grandchildren are entitled to receive in equal shares the 50% of the pre-deceased parent child. The surviving grandchildren inherit 25% each.

In a situation where a single person has no direct bloodline and has an extended family with many cousins, who have offspring, the benefits of having a Trust or Will explicitly stating who will receive, will prevent the cost and burden of a Probate Administration leaving it to distant relatives that the decedent may not have known existed.

Court Probate of Intestate Administration for a deceased without a Trust or Will, can result in large Heir Search Vendor costs. This can be prevented by having a valid written Estate Plan, a Trust or a Will.

Disclaimer

Tip for Property Buyers

When seeking to purchase a residential property, most will engage a licensed Real Estate agent.

An initial crucial decision will be the listing (sale) price.

The agent owes the seller a fiduciary duty to act in the seller’s best interest.

The agent receives a commission as long as the agent successfully finds a prospective buyer that meets the listing price.

Generally, if there is a willing buyer for the listing price, the seller is obligated to pay the commission, irrespective of the seller’s decision to later terminate the agent or the deal, or if the seller hires a new agent.

In this context, one most beware of the possibility that the agent may set the listing price too low, ensuring the commission and an expedited sale.

The agent fears a high listing price without a buyer and no commission.

While it is prudent to set a realistic price, the agent still owes a fiduciary duty to obtain the best possible deal, this usually means the best possible market price.

So don’t be too quick to agree to the agent’s recommended listing price.

Disclaimer