Plan the Orderly Transition of Your Estate

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Plan the Orderly Transition of Your Estate

President Trump’s recently released 2017 Tax Reform for Economic Growth and American Jobs seeks to do away with federal estate taxes, or what many refer to as the “death tax.” With current exemptions for estates valued at less than $5.49 million ($10.9 million for married couples), however, the death of the death tax hardly matters to most Americans. What does matter is the orderly transition of wealth, property, and personal values through a thoughtful plan prepared well in advance.

Avoid Probate

In the absence of a good estate plan, the transfer of assets to heirs occurs under the supervision of the probate court. In California, any estate worth more than $150,000 in monetary assets or $50,000 in real estate is subject to probate. Probate is the court process that a person’s assets must go through to pass to another person when assets are titled in the decedent’s name.

In probate, the state applies its default rules regarding who a decedent’s assets will go to and when. If you have minor children, your assets will pass to them outright when they turn 18 without any oversight. When assets are titled in the name of a trust, they avoid probate and instead, the assets are dealt with in accordance with the instructions you provided in your estate planning documents. Additionally, probate is a public court process.  On the other hand, trust administration is dealt with privately between the successor trustee and the beneficiaries.

On average, the probate process takes about two years to complete if there are no challenges along the way. A trust administration usually transfers assets to your loved ones in about six months. Probate is also more costly than estate planning.  For example, the cost to probate an estate worth $2,000,000 would be $33,000 at a minimum each for your executor and your executor’s attorney. The cost of putting an estate plan in place is a small percentage of that.

Avoiding the probate process through estate planning will save you time, expense and help maintain your privacy.

Appointment of Guardians for Minor Children

If you pass away while your children are minors and you haven’t done any planning, it will be up to the court to decide who will be named as the guardian of your children – this could mean that the judge could pick the last person you would want raising your children. Through your estate planning, you are able to choose a guardian for your children. It is also important to name a short-term guardian in your estate plan to avoid the placement of your children in protective services if you are unable to care for them in emergency situations. This way, you can be sure that your children will never be in the care of strangers.

Recorded Conversations

When people create estate plans, the plans usually cover a person’s monetary assets, there is no personal legacy left behind – it is a dry set of documents and not much for your loved ones by which to remember you.  In order to create a more personal legacy, one idea is to consider Recorded Conversations as an option.  Through this media you are able to leave a record of who you are, your values, how you would want your children to be raised, and lessons you’ve learned along the way to pass on to your loved ones.

Three Year Reviews

A good rule of thumb is to review your estate plan at least every three years to make sure that your documents are kept up to date as your life, assets, and the law changes. The most important thing about estate planning is making sure that your documents will work for your loved ones when they need them.

 

Even if you aren’t subject to estate taxes, estate planning remains one of the best gifts you can bestow on your loved ones.

 

 

Teresa M. Martinez, Attorney

TMartinez@BFASLaw.com

(805) 966-7000

www.BFASLaw.com

 

 

 

DISCLAIMER:  This Advisor is one of a series of business, real estate, employment, estate planning and tax bulletins prepared by the attorneys at Buynak, Fauver, Archbald & Spray, LLP. This Advisor is not exhaustive, nor is it legal advice. You should discuss your particular situation with us or with your own attorney. Our legal representation is only undertaken through a written engagement letter and not by the distribution or use of this Advisor.

By |2018-08-20T01:39:51+00:00June 8th, 2017|News, The Advisor, The Advisor Video|Comments Off on Plan the Orderly Transition of Your Estate