Absolutely! When you create a revocable living trust, you will be the trustee of your trust with full power over your trust assets. During your lifetime, you will have the authority to sell, mortgage, lease, gift, transfer, pledge, and spend the assets and real property that are titled in your trust, just as if the assets were titled in your name.
A few lending institutions require that real property be taken out of the trust before a refinance. This is not necessary from a legal standpoint, but if the lender insists that you do this, it's fairly simple to transfer the house out of the trust during escrow for the refinance. Once the refinance has closed, make sure to contact your estate planning attorney so that he/she can help you transfer the house back into the trust.
Similarly, if you purchase real property after you've set up your trust and the real property was not transferred into your trust through escrow, contact your estate planning attorney after escrow closes to transfer the property into the trust. Being diligent about keeping your real property titled in your trust will keep that property out of probate.
Friday, June 15, 2012
Saturday, May 12, 2012
Small Estate Affidavit
When a person dies with an estate that does not exceed $150,000 in value, the successors in interest may be able to avoid probate by using a "Small Estate Affidavit". This is also known as an "Affidavit for the Collection of Personal Property under Probate Code Section 13100". The Small Estate Affidavit can only be used for personal property, not for real estate. Examples of personal property include bank accounts, securities, cars, jewelry and furniture.
Tuesday, August 31, 2010
What is the Estate Tax?
An estate tax is a tax on the assets of a deceased person. These assets include most all assets passing to beneficiaries due to death, including assets passing through probate, trust, and life insurance proceeds. Assets passing to a surviving spouse or qualified charity are normally exempt from estate tax.
There is an “exclusion”, also called a “unified credit”, and this amount changes every year. The “exclusion” is the amount that passes to beneficiaries tax free. Every dollar over the exclusion is then subject to estate tax at a rate of approximately 45%. In 2002, a person could pass only $675,000 tax free to his/her beneficiaries. In 2009, that exclusion was raised to $3.5 million. In 2010, there is no estate tax at all. In 2011, the estate tax exclusion will revert to $1 million with a rate of 55% unless Congress acts before the end of the year.
Many trusts can be written in a way to allow for flexibility in estate tax planning. The uncertainty regarding the future of the estate tax makes it especially important to review your existing estate plan and trust today.
See this Wall Street Journal article for more information
There is an “exclusion”, also called a “unified credit”, and this amount changes every year. The “exclusion” is the amount that passes to beneficiaries tax free. Every dollar over the exclusion is then subject to estate tax at a rate of approximately 45%. In 2002, a person could pass only $675,000 tax free to his/her beneficiaries. In 2009, that exclusion was raised to $3.5 million. In 2010, there is no estate tax at all. In 2011, the estate tax exclusion will revert to $1 million with a rate of 55% unless Congress acts before the end of the year.
Many trusts can be written in a way to allow for flexibility in estate tax planning. The uncertainty regarding the future of the estate tax makes it especially important to review your existing estate plan and trust today.
See this Wall Street Journal article for more information
Monday, June 7, 2010
How do I Incorporate my Retirement Accounts into my Estate Plan?
When you set up a revocable living trust, your estate planning attorney will probably advise you to transfer ownership of your real estate, savings accounts and other non tax-deferred assets to the trust. However, ownership of tax-deferred accounts, such as IRAs and 401Ks, does not get transferred to your living trust. We often refer to these types of accounts as “retirement accounts”. We recommend that you name a primary and a secondary/contingent beneficiary of the retirement account(s) when you set up or update your estate plan.
Because these retirement accounts contain untaxed deferred income, you need to be careful how the beneficiary designation forms are completed. For example, the IRS allows your spouse or children to perpetuate the tax deferral. This rule provides an incentive for clients to name their spouse as primary beneficiary and their children as secondary/contingent beneficiaries. Unmarried clients with children may wish to consider naming their children as primary beneficiaries.
If you name your trust as beneficiary of your retirement account, this may result in unintended tax consequences for your beneficiaries. Talk to an experienced estate planning attorney if you want to name your trust as the beneficiary of your retirement account.
To keep your estate plan up to date: Review the beneficiary designations on your retirement plans every few years, keep records of retirement plan beneficiary designations in your estate planning binder, and talk to your estate planning attorney about incorporating beneficiary designations on your retirement accounts into your overall estate plan.
Because these retirement accounts contain untaxed deferred income, you need to be careful how the beneficiary designation forms are completed. For example, the IRS allows your spouse or children to perpetuate the tax deferral. This rule provides an incentive for clients to name their spouse as primary beneficiary and their children as secondary/contingent beneficiaries. Unmarried clients with children may wish to consider naming their children as primary beneficiaries.
If you name your trust as beneficiary of your retirement account, this may result in unintended tax consequences for your beneficiaries. Talk to an experienced estate planning attorney if you want to name your trust as the beneficiary of your retirement account.
To keep your estate plan up to date: Review the beneficiary designations on your retirement plans every few years, keep records of retirement plan beneficiary designations in your estate planning binder, and talk to your estate planning attorney about incorporating beneficiary designations on your retirement accounts into your overall estate plan.
Monday, May 17, 2010
Do I Need an Advance Health Care Directive?
YES! Everyone over the age of 18 living in California should have an Advance Health Care Directive ("AHCD"). The AHCD allows you to do these 3 things:
1. Appoint a health care agent who will have authority to make health care decisions for you if you are no longer able to communicate;
2. Give written instructions to your health care agent regarding end of life decisions (formerly known as the "living will");
3. Give written instructions regarding after-death decisions (organ donation, funeral and burial wishes).
Without an AHCD, these critical decisions may end up being made by people that do not understand your wishes. Ask your estate planning attorney about the AHCD. This is not an expensive document to prepare, and it should be a part of everyone's estate plan. A copy of your signed and witnessed AHCD should be given to your health care agent(s), your health provider(s) and to your attorney. A HIPAA release should also be prepared along with the AHCD to allow your health care agent access to your medical records in case of an emergency.
1. Appoint a health care agent who will have authority to make health care decisions for you if you are no longer able to communicate;
2. Give written instructions to your health care agent regarding end of life decisions (formerly known as the "living will");
3. Give written instructions regarding after-death decisions (organ donation, funeral and burial wishes).
Without an AHCD, these critical decisions may end up being made by people that do not understand your wishes. Ask your estate planning attorney about the AHCD. This is not an expensive document to prepare, and it should be a part of everyone's estate plan. A copy of your signed and witnessed AHCD should be given to your health care agent(s), your health provider(s) and to your attorney. A HIPAA release should also be prepared along with the AHCD to allow your health care agent access to your medical records in case of an emergency.
Friday, April 9, 2010
Do I Need a Living Trust?
Welcome to the California Trusts and Estates blog. I’m an attorney in San Diego specializing in Estate Planning, Estate Administration and Probates. I plan to post current information on this blog regarding these topics for my clients and for the general public.
One of the first questions potential estate planning clients ask me is whether or not it would be worthwhile to set up a living trust. In general, a trust is recommended when an individual owns real property and/or over $100,000 in personal property. This is because, in the State of California, if a person dies owning real property titled in his/her name alone or personal property worth over $100,000, a probate is required in order to transfer that property to the heirs. Many married couples own their real property in joint tenancy or community property with right to survivorship. This form of ownership avoids probate on the real property at the death of the first spouse, but probate will be required at the death of the second spouse.
Not only is a trust useful for avoiding probate at death, it allows a relatively simple way to transfer control over finances to a trusted family member in case of disability. For instance, if an elderly woman develops dementia and does not have her assets in a trust, her children may be forced to petition the court for a conservatorship in order to manage her assets on her behalf.
All in all, living trusts are a great estate planning tool – but there are also plenty of clients who don’t need one. A qualified estate planning attorney will be able to tell you whether or not a trust should be included in your estate plan.
One of the first questions potential estate planning clients ask me is whether or not it would be worthwhile to set up a living trust. In general, a trust is recommended when an individual owns real property and/or over $100,000 in personal property. This is because, in the State of California, if a person dies owning real property titled in his/her name alone or personal property worth over $100,000, a probate is required in order to transfer that property to the heirs. Many married couples own their real property in joint tenancy or community property with right to survivorship. This form of ownership avoids probate on the real property at the death of the first spouse, but probate will be required at the death of the second spouse.
Not only is a trust useful for avoiding probate at death, it allows a relatively simple way to transfer control over finances to a trusted family member in case of disability. For instance, if an elderly woman develops dementia and does not have her assets in a trust, her children may be forced to petition the court for a conservatorship in order to manage her assets on her behalf.
All in all, living trusts are a great estate planning tool – but there are also plenty of clients who don’t need one. A qualified estate planning attorney will be able to tell you whether or not a trust should be included in your estate plan.
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