Everyone knows that an estate plan can ensure your chosen beneficiaries receive the right inheritance. But did you know there are other benefits too? Here’s five things a good estate plan can for you.

1. Protect Against Disability – No, your estate plan can’t prevent disability from striking but it can certainly ensure that you and your estate are protected if it happens. Using an Advanced Health Care Directive and General Durable Power of Attorney can ensure that your medical wishes are followed and that your finances are handled by someone you trust.
2. Provide Incentives to Your Heirs – With the right planning tools, you can do much more than leave your heirs a lump sum estate. Instead, you can create incentives for them to excel and achieve by offering inheritance bonuses for graduating college, getting married or other milestones. You can also set it up so that your heirs’ inheritance matches whatever income they earn each year. If they want a bigger inheritance, they must find a way to earn a better living.
3. Avoid Probate – Yes, with the right tools, your estate plan can help your heirs stay out of probate court. This makes the whole property distribution process much smoother and ensures that the details of your estate remain private.
4. Sponsor A Charity – There are certain types of trusts that allow you to structure assets so that they benefit both your heirs and your favorite charity.  Donating this way also provides significant tax breaks to all parties involved.
5. Protect Dsabled Dependents – A Special Needs Trust can ensure that your disabled loved one continues to qualify for important public benefit programs while still enjoying the benefits of his or her inheritance.

Of course, that’s not all an estate plan can do, but it’s a good start. To learn more about how a good estate plan can make your life easier, contact an experienced and qualified estate planning attorney.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

If you are one of the millions of Americans who has failed to create an estate plan, you are officially signed up for the government estate plan. When you fail to execute as much as a Last Will and Testament  or Living Trust prior to your death, your estate will be handled according to the government’s rules and laws since you are considered to have died intestate. So how does the government estate plan work?

For starters, except for the most modest estates, it is likely that everything you own may have to go through the expensive, time consuming and public probate process before any of it is available for your heirs to use. For example, if your home is titled in your name, it will be officially part of the probate process as will bank accounts, vehicles and other personal items titled in your name.

Once part of the probate process, the state laws of intestacy will determine who receives your estate assets. If you wanted your spouse to get everything, that may not happen under your state’s intestacy laws. If you were not legally married at the time of your death, a life partner may actually end up with nothing. If your estate was modest to begin with, the legal costs associated with probate could diminish it significantly.

The probate court may also determine who becomes the guardian of your minor children if you failed to leave behind a Last Will and Testament and you were not legally married at the time of your death.

To avoid being part of the government’s estate plan, take the time to create your own.

The bottom line is that the government’s estate plan could be far removed from what you actually wanted to happen to your estate so now is the time to create an estate plan of your own design.

The best place to start is with a meeting with an experienced and qualified estate planning attorney. Resist the urge to try to save a few bucks by employing some self help tools such as a will or trust created via a CD or Internet web site.  There is no way that these cut-rate, one size fits all, plans can create a truly effective plan for you and your loved ones.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

Many who have yet to create an estate plan tell themselves “When I become rich and famous I’ll do it because then I will really need one”. Surprisingly, many of the rich and famous still don’t get around to it, creating a legal nightmare when they die. Consider the following short list of rich and famous persons who failed to leave behind an effective estate plan.

Abraham Lincoln: Despite being a lawyer himself, even the 16^th President of the United States died intestate.

Jimi Hendrix: One of the greatest guitar players of all time died at the age of 27. It then took another 34 years to settle his estate after he died without a Will or Trust!

Howard Hughes: Worth in the neighborhood of $2.5 billion when he died in 1976, the eccentric billionaire failed to create an estate plan. Although a Will was produced after his death, it was later determined to be a forgery. Eventually, 22 cousins inherited Hughes’s fortune.

Pablo Picasso — One of the most well known artists to ever live, the artist died at the age of 91 leaving behind an estate valued in the millions, but did not leave behind a Will or Trust. Six years later, at an estimated cost of $30 million, his estate was settled.

Bob Marley: Although he was aware he was dying of cancer, the man who introduced the world to reggae music did not see fit to create an estate plan prior to his death. After his death, alleged children, mothers of those children and various relatives filed claims to his estate estimated to be worth $30 million at the time.

In the end, the oversights of these celebrities costs their loved ones many millions of dollars in avoidable legal expenses and many years of delays in settling their estates.  Even for persons with more modest estates, lack of effective planning will likely have similar negative results.

The common moral of these stories is that procrastination concerning this important part of one’s planning for the future will almost always never yield a happy ending.  The best way to prevent such misfortune from visiting our own families

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

Under ideal circumstances, you will know well ahead of time if someone plans to nominate you to be the executor in a Last Will and Testament. Of course we all know that life doesn’t always present us with ideal circumstances. If you have recently been notified that someone died and nominated you to be the executor of the estate in his or her Will, you may be wondering what to do next.

To begin with, you need to know that you are not required to accept the position of executor. You are free to explain that while you appreciate the confidence the decedent had in you, you do not feel you are in a position to accept the position.

You should also know that being identified as the executor of a Will does not automatically empower you to act.  In smaller estates you may not have to go to court, but generally, you will not have any significant powers until at least 4o days after death.  Then you will typically need to have a specially prepared Affidavit to gather assets.

In larger estates (typically $150,000 and up), you will first need lodge the Will with the court and to petition the probate court to be appointed as the executor.  Once approved by the court, you will be issued Letters Testamentary which will give you legal authority to handle the decedent’s affairs.

In general, once the court has appointed you, there are a few important things that need to be done as soon as possible. Securing the estate assets is at the top of the list. They will eventually be inventoried and valued; however, for now you need to secure them to the best of your ability.

In acting as an executor, you are held to the standard of a fiduciary which imposes a duty on you to act in the interests of the decedent’s estate and the beneficiaries.  Failing to meet your fiduciary duties could expose you to liability to the beneficiaries and even to creditors of the estate.

The position of executor can be difficult and time consuming. Once you decide to accept the appointment, you should seek help from an experienced and qualified probate  attorney. The attorneys fees will be paid for out of the estate assets, not out of your pocket. You, too, are entitled to a fee as the executor of an estate, but it is subject to court approval.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

Believed to be the first of its kind in the United States, the State of Nebraska has recently proposed legislation that would grant the executor of a decedent’s estate access to social media, e-mail, micro-blogging, and other similar accounts. The legislation would not apply to accounts that have been specifically addressed in a decedent’s estate plan with instructions regarding who should control the account; however, all other accounts would fall under the control of the estate executor if the legislation passes.

At the present time, how a social media account is handled upon the death of the account holder is decided by the account administrator. Social media giant Facebook, for instance, has an internal policy that creates a memorial page once notified by family members of the death of the account holder. Once the memorial page has been established, “friends” of the decedent may continue to post comments, but no one is actually allowed to log-on to the account. The Nebraska legislation is aimed at changing policies such as this one by allowing the executor of the estate control over the “asset”.

The Nebraska legislation should remind all of us how fluid the definition of “asset” is for estate planning purposes. Just a decade ago, most of us would not have given much thought, if any, to electronic accounts, files, or communications when planning our estate. In the new digital age, however, we may need to re-evaluate what needs to be included in our estate plan.

The best way to incorporate these protections into an estate plan is to work with a qualified and experienced estate planning attorney.  Don’t expect any guidance on these issues from self-help estate planning books, CDs and web sites nor from the bargain-basement “trust mills”

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

The recent death of Whitney Houston was immediately followed by both soaring record sales and reports of trouble brewing surrounding her estate. Houston was found dead in a Beverly Hills hotel room from unknown causes. While many mourned her death and rushed to buy her songs, Houston’s family was already having trouble with Houston’s ex-husband Bobby Brown, according to reports.

Houston’s mother was reportedly not happy about inviting Brown to the funeral but did so anyway. While Brown did show, he didn’t last long. Houston and Brown had an often tumultuous relationship, that produced Houston’s only child, 18 year old Bobbi Kristina. Reports indicate that Houston’s family was concerned that Brown would use the funeral as an opportunity to get close to Bobbi Kristina in hopes of gaining access to Houston’s fortune.

It appears as though Houston did leave behind a Last Will and Testament; however, that may not be enough to settle the matter of who controls her fortune. Bobbi Kristina is old enough to inherit directly — and likely will inherit the bulk of Houston’s estate. Bobbi, however, is reportedly battling certain addictions just as her mother Whitney did for over a decade prior to her death. If Bobbi Kristina is found to be unable to manage her inheritance, then someone — such as Bobby Brown — could petition for conservatorship and thereby gain control of her finances. If Houston’s estate was more carefully planned and included a comprehensive trust through which a young or troubled beneficiary such as her daugher could have been protected, the opportunity to step in and gain control over Bobbi’s inheritance may not be an option. Yet another reminder of how important thorough estate planning is for all of us.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

When serving as executor of an estate, you are responsible for identifying legitimate creditor claims.  If you didn’t know better, you might accidently pay claims that aren’t due, such as student loans.  The liability for student loans in canceled at death.  If you’re responsible for settling an estate (or trust) be sure to consult a probate – estate planning attorney for good advice.

Executor Duties

This is a list of common executor duties in California:

• Lodge the will and file a probate probate petition at the courthouse in the county where the decedent resided at his or her death.
• Do whatever the court orders.
• Identify, gather, appraise, manage, and protect all assets.
• Identify and pay legitimate creditor claims, not student loans.
• Communicate with beneficiaries.
• Work with needed professional advisors such as probate attorney and CPA.
• File and pay all appropriate tax returns such as last income tax return for decedent, estate income tax return, California inheritance tax return, and federal estate tax return.
• Distribute assets to beneficiaries as the court directs.
• Close estate with permission of the court.

Can I Just Carry Out the Executor Duties without Professional Advisor Assistance?

There is no law mandating that you have to hire a probate attorney, but theCalifornia law holds that an executor is personally liable for losses sustained by the estate and mistakes he or she makes.  What if you paid a student loan bill that wasn’t due?  Your personal assets are at risk.

Qualified and experienced probate attorneys are highly trained and carry malpractice insurance.  They handle estates as part of their normal business practice.

It’s better to error on the conservative side, consult with a qualified and experienced probate attorney if you are the executor of an estate.  Remember the student loan example.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

A trust creates a special relationship between people and property that the trust owns. The person who created the trust, called the trustor, transfers ownership of his or her property to the trust as the new owner. Trustors are also sometimes referred to as settlors and trust makers. The trustor also states who shall receive the benefit of that property, a person known as a beneficiary, and who shall manage the property for the trust, known as the trustee. But can a trustor also be a beneficiary or a trustee? Let’s take a look at a couple of scenarios.

The trustor is the trustee. In some trust situations, it’s common for the trustor to serve as trustee. Trustors of revocable living trusts often serve in this position without problems. However, the trustor of an irrevocable trust faces significant problems when serving as a trustee. The benefits conferred by an irrevocable trust may be lost when the trustor serves as the trustee, so talk to a qualified and experienced estate planning attorney if you’re considering this option.

The trustee is the beneficiary. When the trustee both manages the property and receives the benefit of it, what exactly is the difference between this and owning the property outright? A beneficiary serving as trustee may run afoul of the tax protections offered by a trust, and some states do not allow a sole-beneficiary to serve as trustee. However, using a co-trustee may allow the beneficiary to also serve as co-trustee to help maintain the tax protections.  In addition, certain beneficiary protections such as protections from creditors may be lost when a beneficiary is the trustee over their own assets.

The selection of trustees is just one of the many potentially complex issues that need to be carefully navigated when creating an estate plan.  Many do-it-your-selfers and others who are lured by the low cost of Internet or form book estate planning documents find out the hard (and expensive) way that what they thought was simple turned out to be anything but.  The best way to avoid problems from the start is to work with an experienced and qualified estate planning attorney.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

Letters of administration and letters testamentary are specific types of legal documents that are used in the probate process, the court-based legal process in which property that a deceased person owned is transferred to others. The laws and procedures involved in the issuance of these letters of differ by the type of probate procedure involved.  The following discussion discusses California’s procedures.

The Probate Process: Once a person dies with either a will or no will or trust, someone has to step in and manage all the property that person left behind. This person is generally known as the personal representative. In order for there to be a personal representative, except for modest estates, a probate court has to appoint someone to serve in the position. Once appointed, the court will issue letters of administration or letters testamentary to officially recognize the administrator.

Letters:  In cases where there is a will in which an executor has been nominated by the person who created the will, the probate court will issue letters testatmentary to the executor.  In cases where there is no will or the will does not nominate an executor, the probate court will issue letters testamentary.  Once appointed and after the letters have been issued, an administrator or executor can begin managing the estate. For example, the administrator can present the letters of administration to the decedent’s bank and then use the funds in the estate accounts.

Wills: You cannot give someone letters of administration or letters testamentary, but you can make a choice about who receives them. If you want a specific person to administer your estate, you can nominate that person in your Last Will and Testament to be your executor.  You can choose also provide alternates if the original executor is unwilling or unable to serve.  However, except for modest estates, that person will not be empowered to act until appointed by the court and issues letters signed by a judge.

The probate process is time consuming, complex and complicated and most often far beyond the abilities of a lay person. If you will be serving as an executor or administrator of someone’s estate, you will be held to the very high standards of conduct applied to a fiduciary.  Accordingly, to avoid possible liability for the failure to properly carry out the myriad of legal duties imposed upon an executor or administrator, it is prudent to retain a qualified and  experienced probate attorney to assist you.  The fees of the probate attorney are paid for by the decedent’s estate, not personally by the executor or administrator.  The executor and adminstrator can also be compensated for their services from the decedent’s estate.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

Trusts have been around for hundreds of years; specifically, the living trust gained popularity in the 1970s as a probate avoidance technique.  Today, living trusts are often used as a foundational document in estate plans.

We’ve found that many folks have both questions and misconceptions about the living trust; so, in this three part series, we answer your living trust questions.

Will I always be the trustee of my living trust?

You can be the trustee of your trust as long as you are willing and able. If you become incapacitated or die or resign, a successor trustee of your choice will step into your shoes and carry out the trust instructions.  If you create a joint trust with your spouse, you may both initially be co-trustees. When one spouse is no longer able or willing to serve as trustee, the other spouse often continues to serve as trustee either alone or with another co-trustee.

Do I use a living trust to avoid probate?

First, let us emphasize that there are many benefits of a living trust.  Avoiding probate is just one of the benefits.

Second, let us emphasize that a living trust only avoids probate for those assets that are properly titled into the trust.  This means that after your sign the living trust document, you MUST take the additional step of changing the title and/or beneficiary of assets.  Your estate planning attorney will show you how.

Does a living trust pay taxes?  I’ve heard trust tax rates are high.

While you are alive and well, your living trust is NOT a taxable entity.  You file your taxes as you always have on your own individual (or joint, if married) 1040.  You use your own social security number.  Essentially, your living trust is invisible to the IRS during the lifetime of the original trustor.

We’ll answer a few more of your living trust questions in part 3 of 3, An Estate Planning Attorney Answers Your Living Trust Questions.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.