Estate Planning: Questions and Answers

Estate planning is the process by which we arrange for the eventual transfer of our property to our beneficiaries, while minimizing probate fees and taxes.
1. What legal documents are used in estate planning? These include the revocable living trust, wills, deeds, assignments of interests, Powers of Attorney and Advanced Health Care Directives.
2. What is the difference between a testamentary trust and an inter vivo trust?   The testamentary trust is written in a will, takes effect at the signer’s death and is subject to probate proceedings. The inter vivo (living) trust takes effect when it is signed, and is used both to control assets during the life of the signer and to provide for transfer of assets without probate at the signer’s death.
3. I’m not rich. Do I need a living trust?  In California, gross estates of more than $150,000.00 are subject to probate. You may save your beneficiaries thousands of dollars, plus considerable time and effort, by holding your assets as Trustee of a living trust.
4. Should my CD’s be in my living trust?  Yes. A major purpose of estate planning is to be sure you don’t hold assets in your own name. Assets in your own name would be subject to probate at your death.
5. What is joint tenancy?   Joint tenancy is a form of title featuring an automatic right of survivorship upon the death of one joint tenant. Property held in joint tenancy is not subject to probate.
6. Why have a living trust, if I can hold all my property in joint tenancy? Disadvantages of joint tenancy include possible adverse tax consequences and loss of control of assets. Before you hold assets in joint tenancy, you should discuss this matter with legal and tax counsel.
7. What about taxes?    A living trust may be used to avoid thousands of dollars in federal estate taxes on the second death of a husband and wife who have a combined net worth of over $5.49 million dollars.
8. How often should I review my will or trust? Whenever there is a change of circumstances, such as the birth or death of a beneficiary, the death or incapacity of a personal representative, a significant change in your relationship with any beneficiary or fiduciary, any major wealth change, or a separation or divorce.
Jerry Kessler practices law in Santa Clarita. He may be reached at 661-255-1001.