Estate Planning Frequently Asked Questions:

1.     What is estate planning?

Estate planning is the process of meeting with an attorney who creates legal documents that clearly communicate and document your end-of-life wishes, including what happens if you become incapacitated and are unable to make medical or financial decisions for yourself. 

Estate planning is a good idea for every adult, not only the wealthy or elderly. 

Though not all estate plans are the same, the most common documents are:

  • Will: Identify who will receive your assets (your beneficiaries), select guardians for your minor children, and name an executor to ensure your final wishes are carried out.

  • Revocable Trust: Transfer your assets to your designated beneficiaries when you pass away while avoiding the probate process.  You can change or cancel a revocable trust during your lifetime, and you can put assets into or take assets out of the name of the trust at any time.

  • Advanced Health Care Directive: Select a person or persons (“agent”) to make health care and medical treatment decisions for you if you become incapacitated and cannot make decisions for yourself. You can also specify the type of medical treatment you want under specific circumstances (ex. artificial life support, organ donation, tube feeding).

  • Financial Power of Attorney:  Select a person or persons (“agent”) to manage your financial or legal affairs if you become incapacitated and cannot make decisions for yourself. It not only gives the agent power over your finances, but can also include specific directions on how you would want your finances to be handled.

2.     What is an estate?

An estate is any property or assets you own at the time of your death, including:

  • real property (ex. homes, vacant land)

  • personal property (ex. cars, jewelry, art)

  • bank accounts

  • securities (ex. stocks, bonds)

  • life insurance policies

  • retirement plans

  • business interests

3.     How does estate planning help me?

A well-designed plan protects you and your family during your incapacity and after your death, and can achieve the following:

  • Name someone to administer your estate after you die

  • Identify who you wish to receive your assets after you die

  • Appoint a guardian to care for any minor children

  • Avoid the lengthy and costly probate process

  • Identify someone to make financial or medical decisions for you in the event that an illness or injury results in your incapacity

  • Direct any type of life-prolonging medical care

  • Express funeral and other end-of-life wishes, and how related expenses should be paid

  • Minimize any applicable taxes 

4.     What is probate?

Probate is the court-supervised process of authenticating a decedent’s will if there is one; collecting the decedent’s assets; notifying interested parties; paying the decedent’s bills, taxes, and any creditors; and then distributing what is left to the decedent’s heirs or beneficiaries.

A person, usually a family member of the decedent, files a petition with the probate court to be granted the legal authority to manage the administration of the decedent’s estate.  Assuming they qualify and there is no contest, that person is appointed either as an executor or personal representative, depending on whether the decedent left a will.

5.     How long does probate take and how much does it cost?

Each state in the United States has slightly different probate rules and procedures, though the probate process in every state is time consuming and costly.   

In California, probate can take anywhere from 6 months to several years depending on the circumstances. Some factors that affect timing are whether family members agree, how many assets the decedent left, whether the will is contested, whether there are creditors, how difficult it is to find beneficiaries or heirs, and whether the executor or personal representative is attentive to his or her responsibilities.

In addition to court filing fees, the executor or personal representative typically hires a probate attorney to advise them throughout the process.  In California, probate attorneys charge a fee that is a percentage of the value of the decedent’s assets that go through probate. Those percentages are set by state law. In California, those percentages currently are: 4% of the first $100,000 of the gross value of the probate estate, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9 million, and so on. 

6.     Does every estate go through probate?

No, not every estate goes through probate.

Probate may not be necessary if a decedent left a small estate.  For example, in California, if the gross value of the decedent’s total estate (real and personal property) in California is $150,000 or less, the successor(s) of the decedent may not have to go to court.  California permits a small estate affidavit as a way for a decedent’s successor(s) to claim assets instead of going through probate. If the decedent left real property, even if worth $150,00o or less, the estate may need to go through a simplified probate process to legally transfer title.

In addition to small estates, if the decedent created a valid trust and placed his or her assets into that trust, those assets will avoid probate. When a person (the “Settlor”) creates a trust, the assets are owned by the trustee, so upon the death of the Settlor, the trustee transfers the Settlor’s assets directly to the Settlor’s beneficiaries.

7.     Who should I name as my Executor or Trustee?

People typically name a close family member or friend to serve as their executor or trustee.  You should select a person who you feel comfortable will respect your wishes and carefully manage your estate.  If possible, you also should pick a person who lives close to you. It is more difficult to serve as executor or trustee if you have to travel to fulfill your responsibilities. 

If you do not have someone in your life that you trust to serve in this important role, you should consider naming a professional fiduciary.  Professional fiduciaries offer estate management services among other services.  California requires that professional fiduciaries are licensed and complete ongoing education requirements.