by Bezaire, Ledwitz & Associates, APC | Last updated Feb 22, 2023 | Trusts
Basically there are two types of revocable living trusts for married couples. The first type is called a simple or basic trust. With a basic trust, while both spouses are living, they continue to manage the estate together as they had before creating the trust. Upon death of one spouse, the surviving spouse has sole and absolute control over the estate. When the second spouse dies, the assets are distributed to their heirs as directed in the trust. The single trust is advisble for husband and wives whose estates mee the following conditions: The combined estate is under the estate tax exemption (Currently $5,125,000 in 2012) and will never exceed the tax exemption. The spouses are willing to allow the surviving spouse to have full control and unrestricted use of the trust assets after the death of one spouse. If the estate is over the tax exemption, or could grow past it, or if the spouses want to put restrictions upon the estate once one has died, then the couple would need to go through advanced estate planning to make sure they minimize taxes, and use an A-B Trust (although if an estate is particularly large, additional strategies would be put in place). An A-B Trust is a means of dividing a “husband and wife” estate into two trusts upon the death of one spouse. The main purpose of using the this type of trust is to prevent losing any portion of the federal estate tax exemption when the first spouse dies. For example, let’s assume that a married couple have an estate valued at $10,000,000. If the husband dies, leaving the estate to the wife and the wife dies after, leaving the estate to the children,... 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...