JAMES F. WATTS
A LAW CORPORATION
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Why
Estate Planning?
Estate Planning is the legal specialty that deals with the creation, protection, preservation, management and distribution of assets. Your estate is everything you own, including real estate, securities, cash, insurance policies, motorized and unmotorized vehicles and all household belongings. The idea is that even after you die, you ought to be able to control how your assets are managed and distributed, to minimize taxes and transfer fees, and to preserve the maximum value and utility of your estate your family.
What are the Specific Goals of Estate Planning?
In order to accomplish the general objectives of estate planning, the specific goals are: (1) to minimize income taxes and thereby maximize the growth of the estate, (2) to avoid conservatorship court proceedings in the event the owner of the estate becomes mentally or physically incapacitated, (3) to provide management of the estate and care for the owner of the estate in the event the owner becomes disabled, (4) to avoid subjecting the estate to the expenses involved in guardianship court proceedings in the event any of the beneficiaries happen to be under the age of legal majority (18 in California, and age 21 in many other states) (5) to avoid probate court proceedings upon the death of the owner of the estate, (6) to permit the owner of the assets to control the distribution of the estate after the owner’s death.
What Can Go Wrong
What happens if you become physically or mentally disabled? What happens if you and one of your family members die in an accident? What if, when you die, your children aren’t old enough or mature enough to handle your estate responsibly? After all, managing assets isn’t easy, and it can be very tempting to keep spending until there isn’t anything left. Trusts are designed specifically to address these and other problems. Supporting documents, such as Powers of Attorney and Nominations of Conservator determine who will make decisions, both financial and health care related, for you in the event that you become disabled, either temporarily or permanently. These documents, among others, also set forth how and where you wish to be cared for, and under what conditions you may wish for life-sustaining treatment to be terminated. Trusts and their supporting documents assure that your wishes will be complied with even if you become unable to communicate. We are specialists in dealing with every contingency, with solutions including Special Needs Trust provisions to handle health problems including hospitalization, delayed or gradual distribution of trust funds, and Life Estate Trust provisions that spread out inheritances over the course of the beneficiary’s lifetime and prevent the loss of the inheritance to lawsuits and divorce. You will receive a trust document that is specifically designed to suit your needs, and is easily amended to incorporate any new needs that may arise in the future.
How a Trust Saves you Money
Although the creation of a trust and supporting documents does cost more than creating a will, the trust will pay off in the long run. Currently, an estate is required to go through probate court if the total estate is valued at $100,000 or more (Probate Code §13151), or if the estate includes real estate valued at $20,000 or more (Probate Code §13200). This wouldn’t be such a problem, except for the fact that the average probate costs 10% of the gross value of the estate and can take two or more years to complete! Also, all assets and debts become public record, available to any person who wants to find out exactly how much you owned and how much you owed. In the event you become disabled and you have not created a trust, the court will appoint a conservator to care for you. The initial conservatorship proceeding may cost upwards of $5,000, with yearly costs of $2,000 or more. Furthermore, the court must re-establish the conservatorship every two years, further draining your estate. A trust avoids both probate and conservatorship proceedings, easily saving you tens of thousands of dollars, and speeding up distribution of your estate. To download a Chart of Estate Taxes and Probate Fees, click here.
