Today, I will answer the 15 most common questions about estate planning…
I have assisted hundreds of families properly plan their estates without dealing with government, paying additional taxes, or paying ridiculous probate fees.
Then attend a seminar or watch a webinar regarding estate planning.
If not, then feel free to read on where I cover the 15 Most Asked Questions for Starting or Updating Your Estate Plan.
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Estate planning allows you to move your assets to the next generation and avoid government interference and unnecessary fees and taxes. Estate planning primarily solves these questions:
(1) Who will get your assets?
(2) Who will be in charge of distributing your assets
(3) How and when your assets will be distributed to your loved ones?
The best way to properly prepare for estate planning is to bring copies of all of your most recent financial documents and deeds to real property. You can meet with an attorney without the above documents and attend your Personal Consultation and bring them in at a later date.
One of the main purposes of a living trust is to avoid probate.
Probate is the court procedure that moves assets from your name to your beneficiaries (loved ones) after you pass away. It is long, expensive and unnecessary.
A California probate can cost a minimum of $40,000 for someone who owns a house worth only $800,000. The above example does not include any bank accounts or other assets you own!
A properly drafted living trust (think of a living trust as your personal treasure chest) filled with your assets will avoid a Probate and those extraordinarily high fees.
If your assets gross worth of over $150,000, you will likely need a Living Trust to avoid a Probate.
Yes, if you own a $500,000 property with a $400,000 mortgage, the law states that your asset will go through Probate and you will be charged fees for a $500,000 asset. The net value is irrelevant for Probate fee assessment.
Therefore, anyone owning property in California will likely need a Living Trust.
Even if you do not own property, your assets may have a combined value of over $150,000, and therefore will go through Probate.
Still need more information on how to start your estate plan? Email me at firstname.lastname@example.org
1. Avoiding Probate
2. Avoiding Property Tax Hikes after Death for your children
3. Avoiding paying a Huge Tax (Capital Gains) when your beneficiaries sell your Property
4. Protecting your assets from your beneficiary’s future divorce (after you die)
5. Making sure your assets are not wasted by your Beneficiaries when you are gone
6. Protecting your assets from your beneficiary’s creditors (after death)
7. Protecting your spouse from giving away your half of the assets to another family (remarriage situation) when you are gone
8. There are more benefits…
You can. Any joint tenant will inherit the property when you die without probate.
But, this is one of the worst things you can do. There is two main reasons why this style of planning should be avoided:
A. You lose tax benefits when you or your inheritors sell your property. You avoid gaining a full step-up in basis when your beneficiaries inherit your property.
B. Your house can be taken away from you in a lawsuit against the new joint tenant. That is right! Your house is now an asset of the joint tenant and can be taken away if there is a lawsuit against that person!
These disadvantages also apply if you add your beneficiary as a joint tenant on your investment or bank accounts.
The short answer is no. A living trust does not offer you asset protection while you are alive. A living trust does offer your beneficiaries asset protection if it is structured properly.
Are you wondering what you can do to protect your assets? Email me at email@example.com
An estate plan is the general term for planning, which includes a will, living trust, power of attorneys, property agreements, healthcare power of attorney,
The assets included in your estate include, but are not limited to all assets you own, such as:
A. Real Property
B. Investment accounts
C. Bank accounts
D. Retirement assets (IRA, 401K, 403b, Roth IRA, SEP IRA, and other retirement assets)
E. Life Insurance
G. Personal property (cars, artwork, jewelry, etc.)
H. Anything else you own that is valuable.
This is a common misconception. Not all assets can be included in your living trust. Nevertheless, the beneficiary of these assets can by a living trust, depending on your personal goals. These assets are listed below:
A. Retirement assets (IRA, 401K, 403b, Roth IRA, SEP IRA, and other retirement assets)
B. Life Insurance
D. Any beneficiary designated account
Still not sure if your estate plan properly includes your assets (ie your Treasure Chest is not filled properly)? Email me at firstname.lastname@example.org
Here is another common issue. People create a trust and then do not put anything into their Personal Treasure Chest (Living Trust). A house or any real property needs to be formally moved into a trust by transferring title into the trust. This includes a grant deed or a quitclaim deed. Without doing this step, the house will go through probate even if you have a living trust.
If you die with a properly done living trust, you will avoid probate and instead go through a private, shorter, cheaper procedure called Trust Administration. The terms of the living trust will be followed and distribute to your beneficiaries. It is that simple!
You avoid both a probate and a conservatorship with the proper estate planning.
The laws change. You change. Your family changes. It is important for you to update your plan every couple of years or when you have a change in your circumstances.
Let me tell you a SECRET – almost all plans signed previous to 2011 are out of date. Even worse, the older plans can actually cause a huge inconvenience and increased attorneys fees for your surviving spouse.
Why is are the pre-2011 plans not up to date? It is because there was a huge change in the tax law which renders most estate plans useless and a huge burden.
Get your plan checked as soon as possible.
All three of these taxes are essentially the same thing.
Until 2025, any person can own $11.49 million dollars, and not pay a dime of estate tax. That means that most likely, you will not pay any estate tax. For married couples, the exemption is doubled to $22.98 million dollars.
Any amount over the exemption amount (currently $11.49 million dollars for unmarried and 22.98 million for married), will be taxed at 40% due 9 months after death. Yes, you will probably need to fire sale real estate assets at a substantial discount to pay this dreaded tax.
If you have substantially more assets that the above amount listed, you need to engage in Advanced Planning. The goal of Advanced Planning is to reduce or entirely eliminate you estate tax bill.
Still not sure if you will pay an estate tax upon death? Email me at email@example.com