When someone passes away, their property needs to be distributed to their heirs and/or beneficiaries. Probate is the most widely known manner of doing this. But how do you know if probate is necessary? Not everyone’s property needs to go through probate; this article will address the circumstances under which probate will not be necessary.
There are some occasions where an individual may not be privy to whether a family member provided for them in their will, in life insurance, in a trust, or in some other manner. This can arise where family members have become estranged; a common scenario involves remarriage of a parent, the new spouse of which does not get along with the children.
A full probate proceeding is not always necessary, even if the Decedent did not have a trust. This blog will briefly survey the available procedures for transferring non-trust, non-joint assets of a decedent.
A full probate is necessary if the Decedent’s gross estate is valued at more than $150,000, or s/he had real property in California worth more than $50,000. The probate process is described in detail in our 8-06-2015 blog.
A will or trust can not only fail to carry out the decedent’s intent, it can actually frustrate the intended estate distribution, and cost the decedent’s loved ones significant time and money, not to mention anguish.
Particularly in an era of online-assisted do-it-yourself legal work, poorly made self-made and cookie cutter wills and trusts abound.
No contest clauses, also known as in terrorem (literally, “in fear”) clauses, are a type of safeguard against will and trust challenges. Inserted by the testator (the person who made the will) or trustmaker (aka “trustor” or “grantor”), these clauses effectively tell beneficiaries, “if you try to challenge the will/trust, you will lose your share of inheritance.
As noted, wills and trusts are the most common estate planning tools, but are far from the only tools. Depending on family dynamics, estate size and composition, a client may also want to engage the following.
FAMILY LIMITED PARTNERSHIPS AND LLC’S
For families that own significant assets such as rental property or operate small businesses can benefit from the use of entities such as family limited partnerships (FLPs) or family limited liability corporations (LLCs). These entities provide several benefits for parents and subsequent generations.
A Will is a document that sets forth how you want your property distributed upon your death. It can be extremely specific (e.g., “I hereby give, devise and bequeath my personal residence and all personal property to my son Jerome, with the exceptions that all of my fine china shall go to my niece Jenny, and my yellow couch to my best friend Fifi.
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.
What is a trust protector? The terms trust protector and trust advisor are often used interchangeably; this article uses the term trust protector to refer to both. Bluntly put, a trust protector is a person - other than the settlor or trustee – who holds various trust-related powers over the trustee.
Your aging aunt has asked you to be trustee of the trust she set up for her spendthrift daughter. “Why not?” you think. Think again. As a laymen, Trusteeship over another’s trust is a burdensome job, fraught with potential personal (read: you pay) liability.