Estate Planning

At L+G, LLP, our experienced and dedicated attorneys and staff are prepared to assist you with putting your wishes into an estate plan tailored to meet your goals.

One common goal is to designate individuals to act on your behalf if you become unable to make decisions. Without a making these decisions, the Court will appoint someone to make decisions for you. By working with our estate planning team, you will be empowered to make decisions about your life and your property.

Another common goal is to distribute your estate pursuant to your intent. Without a plan, state laws will determine how your estate will be distributed. Sometimes even with an estate plan, family members or friends will challenge distribution provisions. The professionals at L+G, LLP can guide you towards a plan that embraces your desires and minimizes the risk of post-death litigation.

If you do have an estate plan, it is wise to have it reviewed from time to time. This helps ensure any changes, either in the law or in your life, make it into your plan. For more information on changes in the law that may impact your existing estate plan or trust.

Probate and Trust Administration

Administrating an estate after the death of a loved one is a process. Some assets will pass automatically to beneficiaries, separate of any administration process. However, many assets typically require either probate or trust administration.

At L+G, LLP, we can assist you with determining how your estate is to be administered and guide you through that process. In a probate, where assets are not held in a trust and exceed $150,000 in cumulative value, the process requires supervision from the Court in order to transfer title. If property was placed into a trust, the process can be made easier by having an attorney guide the trustee through the tasks and duties required by law without a formal probate.

Frequently Asked Questions:

  • What is Estate Planning?
    Basic estate planning should include an Advanced Health Care Directive, a Durable Power of Attorney for Financial Management and a Simple Will. Generally, if you hold title to assets with a value at or near $150,000 then you should consider a revocable trust. Without the benefit of a revocable trust your estate will be probated.
  • What is a Durable Power of Attorney?
    If you become incapacitated and are unable to make medical or financial decisions on your own, your loved ones would need to petition the local Superior Court appoint a conservator of your person and your estate to make medical and financial decisions on your behalf. The process can by lengthy and very expensive. The need for the appointment of a conservator is eliminated if you have executed an Advance Health Care Directive and Durable Power of Attorney for Financial Management.
  • What is a Revocable Trust/Living Trust?
    A revocable trust, sometimes called a living trust, revocable inter vivos trust or grantor trust, gives your trustee the legal right to manage and control the assets held in by the trust. Most individuals or married couples name themselves as the trustee(s) of their trust and maintain control and the benefit of their assets during their lifetimes naming successor trustees at death or incapacity. A revocable trust instructs the trustee upon death to distribute assets to beneficiaries in accordance with your wishes.
  • What are the benefits of having a Revocable Trust?
    The asset held in your revocable trust can be managed and distributed by the trustee in accordance with your directions without court supervision, and with significantly less costs and fees. Furthermore, Probate Code sections 10800 and 10810 set for the statutory fee for the personal representatives and attorneys’ to probate your estate. For example, if you die leaving an estate of $1,000,000.00 your estate would pay $23,000.00 in both executor and ordinary attorneys’ fees for a total of $46,000.00. This does not include possible extraordinary fees that arise from such things as property management during probate.
  • Does having a Revocable Trust Avoid the Probate Process?
    Presently, if you die in the State of California having assets to or more than $150,000, without the benefit of a revocable trust, your estate will be probated. However, if you have a revocable trust your estate may avoid the probate process but only if you have properly funded your assets to your trust. Meaning any and all real property must be deeded into your Trust. Certain investment accounts must be titled in the name of the Trust. In addition, beneficiary designations and life insurance policies must be considered depending upon your circumstances if naming the trust as the primary or contingent beneficiary. This is an ongoing process and you will need to continue to fund any newly acquired assets into to trust during your lifetime.
  • What is the Federal Estate Tax?
    The exemption equivalent of the amount of property which can pass free of estate tax for persons dying in 2015 is $5.43 million. If you are a married person the amount increases twice the adjusted exemption amount at time of death. The exemption equivalent is subject to change. If your estate exceeds that amount of the estate may be between 35 and 55%. In order to avoid paying federal estate tax you may need to consider advanced estate planning vehicles, such as irrevocable trusts.
  • What is a Conservatorship?
    A person over the age of 18 who is unable to make medical decisions for themselves, or is impaired and vulnerable to undue influence or fraud with respect to making financial decisions may need a conservatorship. A conservator must be appointed by the Court and given the legal authority to make medical decisions and manage financial affairs. All of this is subject to Court supervision and approval.
    Conservatorship proceeding are designed to help protect you at the time when you are vulnerable or incapable of managing your assets. They are public in nature and can be costly because of the substantial court intervention.
  • Who Should Draft a Revocable Trust?
    An attorney specializing in estate planning is the best person to prepare your revocable trust and accompanying documents. The California State Bar warns against individuals that may purport to be “trust specialists” or “certified planners” and are truly interested in selling insurance based products such as annuities and other commission based products.
    That is why it is best to speak with an attorney and your personal financial advisor or CPA for advice regarding the estate plan that is the best fit for you.

Reviewing and Revising Trusts

If you are married and executed a living trust between 1981 and 2012, it is highly likely that it is what is commonly called a Bypass Trust or QTIP Trust. This was done primarily to insure that each spouse took advantage of the greatest amount that could pass free from Federal Estate Taxes. The American Taxpayer Relief Act of 2012, signed into law in early 2013, made portability a permanent part of estate planning by allowing a husband and wife to each take the greatest amount free from Federal Estate Taxes without having to do the above trusts. Portability allows the surviving spouse to transfer the deceased spouse’s unused exemption amount for estate and gifts taxes so long as an election is made on a Federal estate tax return In 2016 the estate tax exclusion is $5.45 million per individual and $10.9 million for a married couple all of which would. Today this is accomplished with as simpler trust format consisting of a survivor’s trust and exemption trust.

The problem today after 2013 with a Bypass Trust or QTIP Trust is as follows:

  • Requires the surviving spouse to divide those assets into two (2) separate Trusts after the first death;
  • File a separate income tax return for the deceased spouse’s Trust each year;
  • The surviving spouse cannot amend the deceased spouse’s Trust and may be limited in his/her access to income or principal from that Trust;
  • Copies of the deceased spouse’s Trust must be provided to everyone named in that Trust or any previous Amendments;
  • Any person named in the deceased spouse’s Trust or any previous Amendments is entitled to an accounting balanced to the penny retroactive to the date of death and annually for the duration of the surviving spouse’s life; and,
  • The assets in the deceased spouse’s by-pass trust do not receive a step-up in basis after the surviving spouse’s death.

Married couples should give some serious thought to an amendment of this type of trust in its entirety or better yet a restatement of their older pre 2012 trusts to a survivors and exemption trust. The only purpose today to continue with the older forms of the trusts would be as follows:

  • They are a blended family and there are concerns about the surviving spouse disinheriting the deceased spouse’s children;
  • There are concerns about the surviving spouse amending the deceased spouse’s share after the first death (remarriage);
  • One spouse has already died; or,
  • Concerned about someone being able to exert undue influence over surviving spouse.

L+G has been addressing these drafting issues of the older trusts for the last since three years since the passage of The American Taxpayer Relief Act of 2012. We have drafted restatements of trusts for our clients. The tax consequences of not updating a trust can be significant event though trust estate is exempt from estate taxes. For example husband and wife purchased a home in 1995 for $350,000.00. Husband dies in 2005 and the value of the home increased to $500,000.00. At that time the trust administration would have divided title to the home one-half to the survivor’s trust and one-half to the by-pass trust for the purposes of minimizing estate taxes. Wife dies in 2015 and the home at time of death is now worth $1,000,000. The trust estate is within the estate tax exemption. However, the one-half interest in the bypass trust is subject to capital gains with the basis being the value at the basis at the time of Husband’s death. Thus the trust estate faces a 15% capital gains tax on the gain of $500,000. This would have been avoided by not funding the interest to the bypass trust. Today’s trust format avoids this problem entirely.