A Unique Approach to Estate Planning
Estate planning is the process of anticipating and arranging for the disposal of an estate during a person's life. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses.
At Rusconi, Foster & Thomas we believe that every person, couple, and family has a unique estate plan that can be tailored to fit specific situations. In general, estate planning is the process of memorializing and arranging for the distribution of your assets upon your passing. Regardless of what stage of adulthood you are in, an estate plan should be considered a high priority. Whether you are newly married, a new parent, newly divorced, second marriage, or caring for an older parent, our estate planning process attempts to eliminate those uncertainties that you have about the distribution of your assets upon your death.
What is an Estate Plan?
An estate plan is a set of documents that allows you to control how your assets will be managed during your life and after your death. Typically an estate plan includes a durable power of attorney, an advance healthcare directive, a will, and a trust.
A durable power of attorney and an advance healthcare directive are important legal documents when planning for incapacity. When executed correctly, these legal documents allow you to designate a trusted person to control and manage your assets or make important medical decisions for you when you are incapacitated.
A trust allows you to manage your assets while you are alive and after your death. It also allows you to designate the person who will be responsible for distributing your assets to your beneficiaries. A will is a legal document that can supplement a trust. If you have minor children, this legal document is used to nominate a guardian for the care and protection of your children.
Frequently Asked Questions About Estate Planning
Q: What is a durable power of attorney?
A: A durable power of attorney (DPA) allows you to appoint a person called an agent or attorney-in-fact who will be able to make financial decisions and sign documents on your behalf if you are ever incapacitated. Your attorney-in-fact will be able to manage your financial assets, pay your bills, and file your taxes. Contrary to popular belief, a durable power of attorney becomes ineffective once a person has passed away.
Q: What if I Have a Will? Do I Need a Will?
A: The person you name as executor of your will is responsible for making sure your assets are distributed according to your wishes and paying any debts and taxes due after your death. In a will, you can give your assets to people who would not otherwise receive a share of your estate, such as friends and charities. You can also name a guardian for your children and their assets if they are under the age of 18.
Not all assets are covered by your will. Assets such as life insurance, retirement plans, and “pay-on-death” accounts will pass directly to any named beneficiaries.
Q: What is a Revocable Living Trust? Do I Need a Living Trust?
A: A living trust is a legal document that allows you to control and manage your assets both during your life and after your death. Initially, you appoint a trustee, usually yourself, to manage your assets while you are alive. You will also name beneficiaries who you wish to receive your trust property. Some common examples of beneficiaries are children, family members, friends, or charities. After your death, the person you named as your successor trustee will have the responsibility to manage and distribute your trust property through the trust administration process.
However, a trust is not for everyone. An estate valued under $150,000 can usually be distributed without going through probate even if it is not held in a trust. If you have a small, simple estate, a trust may cost more than it is worth.
Q: Do I Need a Will If I Have a Revocable Living Trust?
A: Even if you have a trust, you should still have a will. A pour-over will ensures that any assets belonging to you at the time of your death that were not included in your trust will be made an asset of the trust. For example, a person who received a valuable asset, but inadvertently forgot to include it in the trust, would be able to include it in the trust with a pour-over will. This allows for easy distribution of your estate.
Q: What Happens If I Pass Away With a Revocable Living Trust?
A: If all of your assets are in a trust, your estate will be distributed using a process called trust administration. After your death, your named successor trustee becomes responsible for administering your trust and distributing your assets pursuant to your wishes. Assets held in your trust can usually be distributed to your named beneficiaries without court supervision.
Q: What Happens to My Estate If I Die Without a Revocable Living Trust?
A: If your assets are not held in a trust, they will likely be distributed through a process called probate. Probate is the process of having the court supervise the administration of your estate and distribution of your assets. Typically, probate is a lengthy process because of required court supervision and can be very costly, especially if you have a large estate. For that reason, a trust can become advantageous as your estate grows larger over time.
Regardless of whether you have a will or not, you would likely have to go through probate:
Without a will: Your estate is considered intestate. An administrator will be appointed to manage and administer your estate. Your assets will be distributed according to a process called intestate succession. Under intestate succession, the court will supervise the distribution of your assets to your closest living relatives pursuant to intestate succession laws. This means that there is a possibility that one of your close living relatives could receive a share of your estate even if you did not want them to receive anything.
With a will: Your estate is considered testate. The executor you nominated in your will assumes the responsibility to manage and administer your estate. If you left instructions on how you want your assets to be distributed, your assets will be distributed according to your wishes as described in your will.
Having a professionally drafted will and trust can save your friends and family members the headache of a lengthy and costly probate process.
Q: DO I NEED A Trust?
A: If you expect to have assets worth over $150,000, having a trust will spare your heirs a lot of headaches. Assets held in a trust do not have to go through probate, which can be expensive and time-consuming.
However, a trust is not for everyone. An estate valued at under $150,000 can usually be distributed without going through probate even if your assets are not held in a trust. If you have a small, simple estate, a trust may cost more than it is worth.
We’re Here to Help
For general information on Estate Planning and California Law, view our articles on the topic and our legal resources. If you have specific questions about your estate, please contact us today to discuss your individual needs and concerns.