WHAT EXACTLY IS ESTATE PLANNING? (PART I)

What exactly is estate planning, and who needs it?  Estate planning is primarily the process of determining how, when, and to whom you want your property to pass upon your death.  It also addresses how you want your estate to be handled when and if you lose the ability to manage it yourself (often referred to as “disability planning,” a subset of estate planning).

Good estate planning will, among other things: provide management and protection of family assets; control the management of your property and your personal financial needs when you are unable to manage your estate yourself; eliminate uncertainty regarding inheritance; ensure the continued financial health of your loved ones after you are gone; provide creditor protection to your heirs; simplify administration of your estate; avoid the high cost and time of probate; minimize applicable estate and/or inheritance taxes; define and accomplish your charitable wishes; minimize income taxes payable by your estate (which necessarily reduce the property passed on to your heirs), and; provide post-mortem control over your assets.

SHOULD I NAME MY TRUST AS THE DESIGNATED BENEFICIARY OF MY RETIREMENT BENEFITS?

While most assets can be transferred into trust, certain assets are contractual in nature, and therefore cannot be “funded” into your trust.  The most relevant of these contractual assets are life insurance policies and retirement benefits.

While you cannot place these assets in trust*, you can name your revocable living trust (RLT) as the Designated Beneficiary.

Non-trust and Non-probate Transfers (part III)

DESIGNATED BENEFICIARIES

As with joint tenancies and community property with right of survivorship, property which passes to individual(s) as a result of a designated beneficiary provision (life insurance and retirement assets, generally) is outright, and therefore free of any management by the decedent, and is subject to the beneficiary’s creditors.

Probate Litigation

Probate litigation is sometimes necessary to protect the rights of beneficiaries or heirs, potentially due to an unclear or poorly drafted will or due to a dispute among family members. Probate law in California can be complicated and these matters may easily become hotly contested due to emotionally charged issues and legal complexities.

Valid Wills and Revocation

What constitutes a valid will? Can great Aunt Sally create a valid will by writing “I leave all of my earthly possessions to my cockatiel Cornelius. – Sally” in lipstick, on her vanity mirror? Does it need to be witnessed or notarized? 

A testator (the person making the will) generally must be 18 years old to make a valid will in California, unless they’re an emancipated minor.

What does Probate Administration consist of?

Probate administration entails, at its most basic:

Submitting the Decedent’s will (if there is one) to the appropriate Probate Court (“the Court)”;
Obtaining Letters of administration (with or without a will) and an order for Probate;
Providing proper and timely Notice of Petition to administer the Decedent’s estate, and filing proof of same with the Court;
Attending the hearing on Petition, or telecourt appearance for same;
Filing Duties and Liabilities of Representative or Executor;
Obtaining a taxpayer identification numbers;
Notification to proper government agencies;
Obtaining and submitting proper documentation for the purpose of attaining authority over the Decedent’s assets;
Identifying and gaining control of the Decedent’s assets;
Maintaining the Decedent’s assets (maintaining the condition and safety of real and personal property; making appropriate investments; ensuring cash accounts are held in interest-bearing accounts);
Arranging preparation of final personal income tax returns, and for estate returns;
Preparing and submitting Inventory & Appraisal of Decedent’s date of death assets to probate referee;
Paying debts not requiring formal claims;
Approving or Rejecting creditor claims;
Filing and Inventory & Appraisal with the Court;
Keeping track of all income, receipts, costs and losses, and providing a formal accounting to the Court;
Preparing and submitting a Final Order with Accounting and Proposed Distribution, which also requires giving proper notice to beneficiaries and other necessary parties, and filing Proof of same;
Determining and paying statutorily calculated fees for attorney and representative/executor;
Attending hearing or telecourt on same;
Making court-ordered distributions and obtaining Receipts;
Filing Receipts;
Filing Petition for Discharge of Representative or Executor;

In addition to these tasks, handling Objections to, e.g., the Petition for Probate, or to a Claim rejection or to the Proposed Final distribution, may be necessary.