Probate is the legal and court process for determining how an individual’s debts are paid and remaining assets distributed after death. It is an expensive and time-consuming process that is often very complex and confusing. It usually results from the decedent having only a Will (or no Will) in place, instead of a properly funded Trust and a Will, before death. The good news about probate is that it can almost always be avoided with proper planning with a properly funded Trust before death. In helping to administer an estate after death, we always explore all our options and if court action or probate cannot be avoided completely, there are several procedures that may shorten the process and minimize the expense if the circumstances are right. If you are the Personal Representative or Executor, you do not have to be alone.
The revocable living trust is the cornerstone of any good estate plan in California. It provides the framework for distributing your estate after you pass away and due to its flexible nature can be personalized to deal with your wishes, whatever they may be (e.g. the age and other conditions that may be essential to protect minor children or adults who may need protection from themselves or preservation of means based assistance where inheritance might otherwise cause ineligibility). It also provides the best and safest means of avoiding probate, protecting the inheritance of beneficiaries in the case of remarriage or in a blended family, as well as the ability to minimize estate taxes.
Last Will and Testament
The Will used in conjunction with a trust is commonly referred to as a “pour-over” will. Under the terms of the Will, any assets held at death, which have not previously been transferred into the trust, and which may be owned by the trust, will be added to the Trust at the time of death (but may be subject to a probate administration). The purpose of this is to ensure that assets the trust may own (whether in the Trust or not at death) are distributed according to the dispositive plan set forth in the trust). Please note, however, that assets with named pay-on-death beneficiaries will bypass the trust and the Will, and become the property of the named beneficiary. The Will also name guardians for minor children.
Funding a trust is the essential process of making the Trust the legal owner of various assets. These include deeds for real estate, which are recorded with the County Recorder, and assignments of business and other interests. This is essential to avoid probate. Please note that the Trust cannot own qualified retirement accounts, but may be a beneficiary of such an account (these accounts bypass probate due to the naming of specific beneficiaries). This is common where minor children and/or adult incapacitated persons are involved, as minor beneficiaries cannot receive direct payments, and adults with incapacities, or who you consider too young to manage finances responsibly even if of the age of majority, likely should not receive direct payments either. Life insurance is also generally not owned by a trust, except in rare circumstances, but again, in the case of minors and incapacitated adults, the trust may be named as a beneficiary. Be careful of pay on death beneficiary designations and joint tenancy and/or another right of survivorship designations as these may frustrate testamentary (after death) intent. These types of designations generally control, notwithstanding anything your Trust may say to the contrary.
This is a list of assets that are or should be owned by the trust. This document should be updated regularly. It provides a starting point for finding certain assets, and just as importantly if a listed asset is not legally owned by the trust, it may provide a means of moving the listed asset into the trust, even after death, without full probate, when presented to the court in conjunction with the pour-over will (Last Will and Testament), and the Declaration of Trust. That being said, it is not a replacement for actually transferring legal titled ownership to the trust, or providing some other means (TOD/POD) for the assets to transfer into the trust after death or transfer to the intended beneficiary(ies) outside of the Trust or estate plan.
Advanced Healthcare Directives
The Advance Health Care Directives give the named Agents the power to make medical decisions, sign consents, and/or releases with hospitals and/or doctors. It also acts as a “living will” for end-of-life decisions.
HIPAA Authorization and Waivers
The HIPAA Authorization and Waiver is a “stand-alone” document to authorize health care providers to release information concerning otherwise confidential medical information to the individuals designated to act on your behalf in the event of disability and to any other individuals who you may desire to have such access (if you name one son or daughter as your primary healthcare decision maker, you may desire to allow access to medical information to your other children/relatives as well).
Durable Power of Attorney for Management of Property and Personal Affairs
This is a “general power of attorney” primarily intended to give a named agent the power to deal with any non-trust assets, and non-medical personal decisions, in the event of incapacity. Please be aware that this document does give the agent broad powers to dispose of, sell, convey and encumber real and personal property. It may be drafted as immediately effective or “springing” into effectiveness by incapacity.