Total Estate Planning Package:
An estate planning package typically includes the trust, will(s), health care directive(s), durable power(s) of attorney for financial matters, and various other documents necessary to complete the estate plan. The Law Offices of Nicole Angelucci will provide letters of instruction to help you re-title your assets and fund your trust.
A revocable living trust is a legal document that allows an individual to specify what will happen to their assets while they are still living, incapacitated, or after death. The trust is labeled 'living' because it is made while the individual is still alive. The revocable living trust can be changed or revoked at any time while the person still has capacity to do so.
A trust is simply a written contract created by the Settlor (the person who creates the Trust), delivered to the Trustee (the person who manages the Trust), for the benefit of their beneficiaries. The trust is set up in a way that an individual's assets listed in the trust are 'owned' by the trust. The Settlor, the individual with the assets in the trust, can act as trustee and manage his or her own trust. A successor trustee should be chosen to manage the trust if the original trustee becomes incapacitated. More than one successor trustee should be chosen in case the first loses capacity. Since the assets of the Settlor are in the trust, it avoids probate court.
While you are alive, you still own your property and do whatever you want with it, but you need to fund your trust with your property, so that it can be easily transferred upon the death of the Settlor.
Individuals and families in all income brackets use Trusts to plan their estates and to avoid the probate process in order to minimize court costs, executor and attorney fees. A revocable living trust can be a complex but worthwhile process to protect you, your loved ones, and your hard-earned assets from the probate process as well as minimize your estate taxes.
A trust may include:
- Married A-B Trust
- Special Needs Trusts for disabled beneficiaries
- Qualified Terminable Interest Trust (QTIP) to provide for children from a prior marriage or when the deceased spouse wants to impose control over the assets at death
- Qualified Domestic Trusts (QDOT) to provide for non-citizen spouses
- Honorary Trusts for the care of your pet
| ||2007 ||2008 ||2009 ||2010 ||2011 |
|Estate Tax Exemption ||$2,000,000 ||$2,000,000 ||$3,500,000 ||Tax Repealed ||$1,000,000 |
|Estate Tax Rates ||45% ||45% ||45% ||None ||55% |
|$1 Million Estate Size ||$-0- ||$-0- ||$-0- ||$-0- ||$-0- |
|$2 Million Estate Size ||$-0- ||$-0- ||$-0- ||$-0- ||$435,000 |
|$3 Million Estate Size ||$450,000 ||$450,000 ||$-0- ||$-0- ||$945,000 |
|$4 Million Estate Size ||$900,000 ||$900,000 ||$225,000 ||$-0- ||$1,495,000 |
|$5 Million Estate Size ||$1,350,000 ||$1,350,000 ||$675,000 ||$-0- ||$2,045,000 |
|$10 Million Estate Size ||$3,600,000 ||$3,600,000 ||$2,925,000 ||$-0- ||$4,795,000 |
A will is a legal document that states to whom an individual's assets will be left after his or her death. A will is the most commonly used method for documenting a person's wishes for the distribution of their assets upon death. If you have minor children, a will is the document that spells out who will become the guardian of your children. A lawyer should prepare the will to assure it is in accordance with California law.
Pour-over wills are a safety device in the event that a trust is not properly funded, where the will is admitted to probate and the assets 'pour' into the trust. The assets included in the will are given out after a court-supervised process called probate. Probate transfers an individual's assets to whoever is specified in the will. The probate court charges fees for this service, and these fees are taken directly from the assets before they are given to the recipient.
Power of Attorney for Financial Matters:
A Durable Power of Attorney is a legal document that gives an agent the financial rights of the person signing the document. This document will allow your chosen agent - usually a family member, trusted friend or advisor - to make financial decisions for you, such as manage your bank accounts, pay your bills, deal with government agencies, and file your taxes.
Power of Attorney for Health Care/Advance Health Care Directive:
An advance health care directive allows persons to make their care decisions before they become incapable of making these decisions on their own. This legal agreement authorizes others to make medical decisions on your behalf based on your medical intentions, including life support decisions and the ability to sign nursing home admission papers if you are unable to do so. This document can help eliminate disagreements so as to avoid situations such as the Terry Schiavo case. (http://en.wikipedia.org/wiki/Terri_Schiavo)
Under the recently enacted federal legislation, the Health Insurance Portability and Accountability Act of 1996 (HIPPA) was designed to protect your medical privacy. Unfortunately it also restricts your appointed agents from accessing any information on your health care condition, which is needed to process your health insurance or Medicare claims. You must have your Advance Health Care Directive updated to include a HIPPA release so your appointed agent has the ability to obtain necessary information.
Irrevocable Life Insurance Trust(ILITs):
If an individual has assets that exceed the applicable exclusion amount it is important to place the life insurance proceeds in a separate trust in order to avoid having the proceeds included in your total estate. This way the proceeds won't be taxed and the insurance will also automatically pass to your heirs so that they can pay the federal estate tax.
Community Property Agreement:
This document clarifies the intent that some or all of the assets are community property (owned equally by both spouses).
Changes to Your Estate Plan:
Due to changes in family situations and the law, individuals should review their estate plan periodically.
Probate is the process by which a decedent's estate is transferred to the appropriate beneficiaries or to creditors, when there is no will or an improperly executed will. This is accomplished through the court system by intestate succession laws.
Probate Filing Fees
|Estate Value ||Filing Fee |
|Under $250,000 ||$320 |
|$250,000 - $500,000 ||$385 |
|$500,000 - $750, 000 ||$485 |
|$750,000 - $1,000,000 ||$635 |
|$1,000,000 - $1,500,000 ||$1,135 |
|$1,500,000 - $2,000,000 ||$2,135 |
|$2,000,000 - $2,500,000 ||$2,635 |
|$2,500,000 - $3,500,000 ||$3,635 |
|$3,500,000 or more ||$3,635 plus 2% of estate value over $3.5M |
In California, the cost to probate an estate is based on the fair market value of the decedent's gross estate determined by the following formula: 4% of the first $100,000; 3% of the next $100,000; 2% on the next $100,000; 1% on the next $900,000; 0.5% on the next $15,000,000; and 'reasonable' compensation on the excess over $25,000,000.
California Statutory Compensation for Attorney and Executor in Probate Administration
|FMV of Estate ||Fees ||FMV of Estate ||Fees |
|100,000 || 4,000 || 900,000 || 21,000 |
|125,000 || 4,750 ||1,000,000 || 23,000 |
|150,000 || 5,500 ||1,250,000 || 25,500 |
|175,000 || 6,250 || 1,500,000 || 28,000 |
|200,000 || 7,000 || 2,000,000 || 33,000 |
|300,000 || 9,000 || 3,000,000 || 43,000 |
|400,000 ||11,000 || 4,000,000 || 53,000 |
|500,000 ||13,000 || 5,000,000 || 63,000 |
|700,000 ||17,000 ||10,000,000 ||113,000 |
Upon the death of the Settlor, the trust must be administered. This includes paperwork in order to determine any estate tax issues and determine the new basis of the assets at the time of death. It is necessary to create a list of the assets and their values, file tax returns, pay debts and expenses, and distribute the assets according to the Settlor's intent.
California Domestic Partnerships:
The California Domestic Partner Rights and Responsibilities Act (DPRRA) applies many of the community property laws to same sex couples if they register as domestic partners. Domestic partnerships receive almost all of the rights, obligations and privileges as married couples in California under community property laws. This includes not having property taxes reassessed upon one of the partner's death, even split of assets, inheritance rights and automatic intestacy laws automatically designating the other partner as the beneficiary, and a right to health and life insurance. Although California recognizes same sex couples, the federal government does not, so the couple still needs estate planning documents including a will, trust, and durable power of attorney.
A prenuptial agreement is simply a contract between spouses which trumps state, family and probate laws that otherwise would apply. A prenuptial agreement is a private agreement between two parties who are intending to marry that sets forth the distribution of assets and debts that will occur in the event of the parties divorce or death. They are particularly beneficial in the case of subsequent marriages, to make parties feel that their assets are safe. The agreement must list all individually owned property, and may also specify spousal support payments.
Special Needs Trust
Special needs trusts are drafted to allow a disabled beneficiary to receive inheritance, gifts, lawsuit settlements, or other funds without jeopardizing the beneficiary's eligibility for public benefits. Therefore, these funds can pay for the additional expenses, such as education, counseling, medical and dental expenses, specialty equipment and other necessities and quality of life enhancing expenses that could not be paid for by public assistance funds.
Special needs trusts are normally created by a family member for a child or adult with special needs. You may have been advised to disinherit your child with special needs to protect that child's public benefits, but this is the child that needs your help the most.
Setting up a special needs trust is a fairly simple process, where you appoint trustees who will manage the assets you transfer to your child's trust. During your lifetime, you can serve as trustee, and your successor trustee should be someone you know and trust, such as a relative or close family friend. The trustee will only be able to withdraw funds to pay for such things other than those covered under the governmental and private benefits programs, in order to preserve your child's eligibility for federal, state and charitable benefits programs.
Although it is a tough thought, all parents owe the assurity that their children are well cared for in the event of death or incapacity of a parent. Parents of special needs children face an even greater imperative to do this essential planning.
Disability Medicaid Pay-back Trust
In addition to a Special Needs Trust which is set up by a third party, the disabled individual can often create the trust himself, depending on the program for which he or she seeks benefits. For example, when there has been a damage settlement, the disabled child will be the recipient of the funds and that can make the child ineligible for government benefits. The Omnibus Reconciliation Act of 1993 allows disabled individuals to use their own money to fund a trust very similar to the Special Needs Trust without jeopardizing their eligibility for benefit programs. These are very similar to a special needs trust, except when the disabled individual dies, any money left in the trust will be used to reimburse the lifetime government assistance which was provided.
A conservator is appointed through a court supervised hearing to manage financial affairs and or personal affairs of an individual who has lost the mental capacity to do so on his/her own. The 'conservator of the estate' is appointed to deal with the financial affairs of the conservatee. The 'conservator of the person' is appointed to deal with the personal and healthcare decisions of the conservatee. The conservators can be the same individual or different individuals. A person may nominate a conservator before he or she loses the capacity to do so. A candidate for a conservator should be someone well trusted. A conservatee has the right to fight a conservatorship in court if he/she feels he/she still has the capacity to make financial or medical decisions. If a conservatee has dementia, the court will appoint an attorney to represent the conservatee.
If it is determined that an individual needs a conservatorship and the individual still has the capacity to understand what a conservatorship is, it must be discussed with the individual. If the individual does not have the capacity to understand, as diagnosed by a physician, a conservatorship can be put in place.
After the proper papers have been filed with the court, an investigation will be conducted prior to the appointment. The court investigator will determine if the individual understands or is suitable for a conservatorship. The investigator is required to fill out a form describing why a conservatorship is needed. The investigation has to take place no less than five days before the hearing. If the investigator makes a recommendation for a conservatorship, the judge will probably follow the recommendation. Follow up investigations will continue after the first year has passed, and then every two years thereafter. If an individual has completed all the forms for a conservatorship, and has gotten a capacity form signed by a physician, a conservatorship can take up to six months from filing.
Trusts for Pets
If you're worried about what might happen to your much-loved pet after your death, it is possible to create a trust for your pet provide his or her continuing care and well-being. Pet trusts are now legal in Arizona, California, Colorado, Hawaii, Missouri, Montana, New Mexico, New York, Nevada, North Carolina, Oregon, Tennessee, Utah and Wisconsin. You can choose for a pet trust to take effect upon your death or any disability that prevents you from caring properly for your pet.
You can fund the trust with enough property or cash to care for your pet for his or her expected lifetime. The trustee you designate will then make payments on a regular basis to your pet's caregiver, and pay for your pet's miscellaneous expenses as they come up.
It is important to be as specific as possible in drafting a trust for your pet. You will want to include the name and address of a trustee and alternative trustee, caregiver and alternative caregiver, and detailed information identifying your pet (such as DNA information or a microchip). Further you will want to include the standard of living and care you wish for your pet, instructions on the final disposition of your pet's body, and information on how the remainder of the trust should be distributed once your pet dies.
You know your pet's habits and preferences better than anyone, so be as detailed as possible to insure that your pet gets the care he or she is accustomed to. You'll probably want to include such details as:
For further questions, please contact the Law Offices of Nicole Angelucci at (858) 756-6538. We look forward to hearing from you.
- The type of food your pet prefers
- Exercise routines, such as walks in the park
- How often your pet visits the vet, and vet maintenance routines
- Any chronic health conditions for which your pet must take medication or receive regular health treatment