by Bezaire, Ledwitz & Associates, APC | Last updated Feb 22, 2023 | Estate Planning
Sometimes people can get a little too cleaver in their attempts to avoid probate, and save some money in legal fees. One of the maneuvers we see quite a bit involves adding children, or other family members to accounts are joint tenants. Unfortunately, this maneuver can have real world impacts on you and your assets while you’re still alive. What is a Joint Tenant? A joint tenant is a means of holding title to property so that two or more people (the joint tenants) hold title together with “right of survivorship.” This means that the surviving joint tenant or tenants are entitled to the property upon the death of one joint tenant, without probate. What are the dangers of Joint Tenancy? There are several dangers with adding joint tenants to any accounts or property, and they all stem from this simple fact— When you add a joint tenant to an account or property, you are adding a new owner. Here are some of the common issues we associated with this: 1. Capital Gains If one person owns the property, at that person’s death, the property basis is fully stepped up to the value at the day of death. With a joint tenant, only the decedent’s half is stepped up. This will lead to significant capital gains taxes that would have been entirely avoided if the joint tenant has not been created. 2. Loss of Control When you name someone a joint tenant to your property, you are making an immediate gift of one-half of that property to that person. This gives them ownership rights, and they could do things... by Bezaire, Ledwitz & Associates, APC | Last updated Sep 29, 2019 | Conservatorships, Estate Planning
The best way to avoid a conservatorship is to plan ahead and make sure you’re protected in the event that you become incapacitated. Under California law, if a person is found to be legally incompetent, the probate court can appoint a conservator to oversee a person’s personal or financial affairs. This is where things can get pretty ugly. Some of the times you end up with one of these two scenarios: The wrong person as conservator. Fight over who should be the conservator. The first scenario does not really need that much explaining. You could end up with a conservator that is at geographic distance from you, which would make it harder, you could end up with someone who can’t manage your estate, or with someone you would never have chosen for your own reasons. The second scenario is just as bad. A lengthy legal battle over who should be your conservator could drive up legal expenses, which will be paid from your estate. Additionally, Conservatorships require bi-annual accounting, which in turn is yet another expense that will be paid out of your estate. As I said earlier, the best way to avoid a conservatorship is to plan ahead. There are sections inside of a Revocable Living Trust, where you can appoint and direct your Successor Trustee to step in and manage your estate during your incapacity for your benefit. The trustee you chose would then be able to step in and manage your estate during your incapacity for your benefit. He or She would be able to pay your bills, manage and/or reinvest your assets, and even sells assets... by Bezaire, Ledwitz & Associates, APC | Last updated Feb 22, 2023 | Probate
There are a couple of new Probate Law changes this year: The threshold for file a probate went up from $100,000 to $150,000 pursuant to California Probate Coded section 13000. This amount does not include bank accounts held in joint tenancy or accounts with beneficiary designations such as paid on death (POD). Most Vehicles, boats and motor homes are also excluded from the amount under California Probate Code Section 13050. Additionally, the Federal amount excluded from estate tax increased from $5,000,000 to $5,120,000. The December 17, 2010 change in the law provided that the exemption amount is indexed for inflation. The Estate Tax exemption is still scheduled to significantly decline on January 1, 2013 to $1,000,000. The current tax rate is 35% and will rise to 55% on January 1, 2013. It is important that you review your estate plan with a licensed attorney committed to the practice of estate... by Bezaire, Ledwitz & Associates, APC | Last updated Feb 22, 2023 | Estate Planning, Trusts
A Revocable Living Trust is an alternative to a will, is the cornerstone of most estate plans. You transfer your property from yourself, as trustor, to yourself as trustee. No one else is involved with your trust while you are living. You can buy, sell, trade, invest, and reinvest property without obtaining consent from any other party. In your trust document, you name who will be successor trustee and successor beneficiaries. Upon your death, the successor trustees distribute the estate to the successor beneficiaries exactly as you have directed in your trust. This can be accomplished through gifts, percentages, or a combination of both. There are several common misconceptions about Revocable Livings Trusts, including: Only the wealthy need to have trusts Trusts are too complex for people There are cases where advanced estate planning is necessary. This is typically for wealthy people who need to create particularly complex vehicles to make sure they minimize estate taxes. The simple reality is that essentially everyone should have a trust. In fact, if you have a family, especially with young children, and/or you own a home, it could be irresponsible not to have one. In addition to other benefits of having a trust should you be incapacitated, trusts are not overseen by a probate court, unlike a will. It is true that trusts are a bit more complicated than a will, which can be handwritten on a napkin, with guidance from an experienced estate planning attorney, they can be easy to set up, and maintain. For instance, a will does not need to be funded, but a trust does. Funded, basically refers to transferring necessary assets to the trust.... by Bezaire, Ledwitz & Associates, APC | Last updated Feb 22, 2023 | Estate Planning, Probate, Trusts, Wills
Probate is the legal procedure used to transfer title to assets upon death. The superior Court supervises the payment of debts, taxes and probate fees. The court the supervises the distributions of the estate to the heirs. Unfortunately however, the process is both expensive, time consuming and easily avoidable. A simple probate, without any complications, will take approximately nine months to one year to be completed. However, many probates take longer, sometimes as much as three years or more (particularly if budget and department cutbacks have strained the court’s resources). The most common misconception about probate is that if you have a will, you do not have to go through the probate process. This is actually the exact opposite. A will, by definition, must go through Probate. In addition to any taxes that may have to be paid, there are also fees involved. Some of these fees vary, but there are court mandated attorney and executor fees. It is extremely important to note, that the fees described in the chart below are based on the GROSS value of the estate. For instance, let’s assume that the major asset that you own is a home. Your home is worth $550,000 and you only owe $30,000 against it, leaving $200,000 worth of equity to for your heirs to inherit. According to the California Probate code, because your home has a market value of $550,000 you would have to pay, in addition to any other fees and taxes that you might owe, court mandated attorney and executor fees in the amount of $26,000. This is slightly over 10% of the net value... by Bezaire, Ledwitz & Associates, APC | Last updated Feb 22, 2023 | Advanced Estate Planning, Estate Planning
Estate Planning is the area of the law which deals with putting property to the best possible use for your benefit during your lifetime, and for the benefit of your “beneficiaries” after your death. If the estate has been well planned, your asses should be distributed according to your wishes at a minimum of time and expense. Poor planning may lead to lengthy probate, probate fees and taxes. Unfortunately, most people do not take the time to become aware of the difference between good estate planning and poor estate planning. Many people believe that if they have a valid will, their estate will not have to go through probate. This is simply not true. Wills, by their very nature must go through probate. The fastest and best way to avoid probate is the Revocable Living Trust the very cornerstone of our practice at Bezaire, Ledwitz, and Associates. The advantages of living trusts are significant. Under a will, an estate must be settled in probate court. Lawyer’s fees and court costs can be significant (see chart below). Additionally there may be exasperating delays, and the proceedings are a matter of public record. In sharp contrast, a living trust is settled without court proceedings. A successor trustee simply distributes assets according to the trust’s instructions, under the guidance of an accountant, notary public or lawyer to ensure titles are transferred properly. The process is cheaper, faster, and can save on estate taxes. Gross Estate Value Attorney and Executor Fees $100,000 $4,000 $200,000 $7,000 $300,000 $9,000 $400,000 $11,000 $500,000 $13,000 $600,000 $15,000 $700,000 $17,000 $800,000 $19,000 $900,000 $21,000 $1,000,000 $23,000 $1,500,000 $28,000...