Trusts and Estates Blog

Avoiding Probate with a Small Estate Affidavit

empty pocketsLegal planning and estate strategies seem a smart move for those with large estates that take much planning, but what about the family who doesn’t have much of an estate to transfer? What about those with minimal estates? How can they avoid probate?

Thankfully, probate can be avoided no matter the size of an estate through some simple steps that you and your family attorney can take. For most families, a trust is the vehicle to avoid probate. For small estates, there’s a simple shortcut to take to avoid probate using the preparation of a simple document.

Claiming Property with Affidavits

If the total value of the assets you leave behind (excluding real property) is less than $100,000 in California, your family members may be able to skip probate entirely. If the estate qualifies, the inheritor can prepare a document that states he/she claims a certain piece of the estate (such as a bank account, retirement fund, etc.). We will cover the rules for small estates holding real estate in another article.

The document, called an affidavit, is then presented to the entity holding the asset and signed under oath. The inheritor then must present the affidavit to the bank or business from which they are claiming the property who will then release the property.

Again, the procedure will avoid the probate court and the costly process of enduring probate, but be sure you follow the proper steps in preparing and presenting the affidavit.

If you would like more information concerning estate planning, contact Antelope Valley estate planning law firm Thompson | Von Tungeln (TVT) at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.com and www.Medi-CalHelp.com. www.EstatePlanningSpecialists.com is a comprehensive online resource for personal wealth management solutions through wills and revocable trusts. www.Medi-CalHelp.com is a comprehensive online resource for long term nursing home care for the middle class. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve clients with the creative, effective and custom solutions they demand.

How to Avoid Probate in California

Judge signing a court order In California, the number one goal in estate planning is to avoid probate. California has one of the most rule driven, expensive and time consuming probate systems in the nation. As a result, it makes great sense to avoid probate in the first place.

How does one avoid probate? The best method in California is through the use of trusts. Creating a revocable, or “living trust,” is like creating a corporation. For a couple, think of a trust as a corporation with two shareholders and two managers – the husband and wife. Just like if the head of a corporation dies, the corporation does not cease to exist. The successor managers take over and everything keeps on operating as before. The head of the corporation does not own the assets, the corporation owns everything. The same is true with a trust. Title to assets are held by the trust, so if the individual, or both spouses die, the successor trustee steps in and takes over. There is nothing to probate because title to the assets are held by the trust, not the individuals.

If you would like more information concerning estate planning, including how to avoid probate, contact Antelope Valley estate planning law firm Thompson | Von Tungeln (TVT) at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.comwww.EstatePlanningSpecialists.com and www.Medi-CalHelp.com. www.EstatePlanningSpecialists.com is a comprehensive online resource for personal wealth management solutions through wills and revocable trusts. www.Medi-CalHelp.com is a comprehensive online resource for long term nursing home care for the middle class. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve clients with the creative, effective and custom solutions they demand.

Probate: Defining Probate

Young hands tending to an elderly personEstate planning can sometimes be presented as a headache or painful task, yet the rewards of properly caring for an estate are many. Consider this fact: when you pass, everything you own must be transferred to someone else. Ideally, you will have established a trust which will clearly outline who is to receive what. But what happens if you pass without a trust? Does having a trust make that much difference?

When a person dies without a trust, the estate enters probate. This includes people who only have a will. The dictionary definition of probate is “the legal process in which a will is reviewed to determine whether it is valid and authentic. Probate also refers to the general administering of a deceased person’s will or the estate of a deceased person without a will. The court appoints either an executor named in the will (or an administrator if there is no will) to administer the process of collecting the assets of the deceased person, paying any liabilities remaining on the person’s estate and finally distributing the assets of the estate to beneficiaries named in the will or determined as such by the executor.” Simply put, the court and law of the state determines who receives the contents of the deceased’s estate. It is a primary goal of most people in California to simply avoid probate.

A probate court is not under obligation to honor any verbal or written wishes a person may have expressed as to the appropriation of their estate. Even if the deceased had told others they would receive certain items of the state, without a will proving such, the claims are invalid.

Setting up your estate properly can be a special way for you to show love and appreciation to loved ones or friends after you are gone, but if you are not proactive in creating a trust now, your estate will be handled in probate court.

If you would like more information concerning estate planning, including learning how to avoid probate, contact Antelope Valley estate planning law firm Thompson | Von Tungeln (TVT) at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.comwww.EstatePlanningSpecialists.com and www.Medi-CalHelp.com. www.EstatePlanningSpecialists.com is a comprehensive online resource for personal wealth management solutions through wills and revocable trusts. www.Medi-CalHelp.com is a comprehensive online resource for long term nursing home care for the middle class. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve clients with the creative, effective and custom solutions they demand.

Probate: Having a Will vs Not Having a Will

TaxmanDealing with the death of a loved one can be a difficult and painful process. The emotional roller coaster of dealing with death compounds the necessary process of settling the deceased’s estate. One aspect of settling an estate that should be avoided is probate.

Probate is the legal process of settling an estate in a probate court. If a person establishes a will before dying, the executor of the will presents the will to the probate court. The court then determines if the will is valid, listens to any objections to the will (should there be any), and orders the executor to appropriate possessions, lands, monies, and the contents of the will to the proper beneficiaries.

If a will has not been established, the estate is probated according to the law of the deceased’s state of residence and if any minor children are involved, the state determines the caretakers of the children.

The main difference between dying with a will and dying without one is the distribution of the estate. A person with a will has the say of who receives the contents of the estate. A person without a will has no say over the distribution of their estate, but the authority of the estate is given to a court to be distributed in accordance with state law. (Under both circumstances, however, you will not avoid probate.)

Each state differs in probate law, but most are not ideal in following the wishes of a deceased person. Unless a will has been established correctly under state law, the courts have no obligation to follow the deceased’s verbal or written wishes.

If you would like more information concerning probate, www.EstatePlanningSpecialists.com is a comprehensive online resource for personal wealth management solutions through wills and revocable trusts (which allows you to avoid probate). Whether your estate planning goals are immediate or long-term, a California certified estate planning specialist will be able to counsel you on the best options available to you to meet your individual needs. Call us at (661) 945-5868.

How Securities Are Valued At Death

U.S. tax forms with glasses, pen, and calculatorEstate plans containing securities have specific rules that are best negotiated by a certified estate planning specialist. The federal government has specific rules for the valuation of securities and financial instruments included inside or outside of estate plans. Since there are a vast number of financial instruments available in the market, this article will focus on the more common instruments included in estate plans which include stocks, bonds, mutual funds, Treasury securities, cash and cash-equivalent accounts and retirement accounts.

The federal rules for valuation are:
Stocks, bonds and mutual funds – for stocks, it is the average of the trading range on the date of death, or in the event of a weekend or holiday, the average of the preceding and following trading days. Bonds are priced by averaging the closing price on the date of death and the preceding trading day, and must include any accrued interest. U.S. Savings Bonds are valued at their redemption value at the end of the month, according to the redemption value published by the U.S. government. U.S. Treasury notes and bonds are valued the same as commercial bonds. U.S. Treasury bills are valued at their redemption price, since interest in included in their price.
Cash, bank, and credit union accounts – All cash and cash-equivalent accounts must report the exact value on the date of death. Any uncleared checks must be listed separately so their value can be deducted from the account.
Retirement accounts – including IRA’s, pension, 401(k) and similar retirement accounts must account for the value on the date of death. Any stock, bonds or mutual funds will be valued using the rules mentioned above.

Proper recordkeeping of all of the investments in your estate plan will make the valuation process much easier for your estate planning attorney and loved ones. Keeping meticulous records with your estate planning documents will enable them to efficiently value your assets and avoid any unnecessary investigation that will be subtracted from your estate value.

Antelope Valley estate planning law firm Thompson Von Tungeln (TVT) offers sophisticated estate planning and administration for the affluent, discriminating client. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve these clients with the creative, effective and custom solutions they demand. For more information, contact TVT at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.com and www.Medi-CalHelp.com.

When to create a Will – The Jimi Hendrix Legacy

Electric_GuitarThe landscape of American music was changing. Out with the swing, jazz, rhythm, and blues of the early 1900s, and in with the rock that captivated the nation’s young people. One man who was struck by the change, and some would say led the revolution was known for his retro dress, on-stage antics, and reckless lifestyle. To his mother he was known as Johnny Allen, but across the world he was known as Jimi Hendrix.

To understand the unexpected and sudden fame Jimi experienced, one must realize the poverty into which he was born. His mother, seventeen at the time of his birth, battled alcoholism her entire life and died when Jimi was sixteen years old. His father, a retired Army officer, did little to provide support for Jimi and his four siblings. Of the Hendrix children, Jimi was the only one to live in the care of a family member. His sisters Kathy and Pamela were given up for adoption early in life due to physical deformities. His brother Joseph also suffered physical deformities and was given to state care at age three. His other brother Leon was in and out of welfare care during his childhood.

Needless to say, Jimi faced many difficulties early in life. From run-ins with the law to a dishonorable discharge from the Army and difficulty selling himself as a bona-fide musician, some thought he’d never make it in show business. But despite the many setbacks he faced, Jimi struck gold when he took his music overseas to England.

Between 1966–1970, Jimi Hendrix became one of the leading rock guitarists in both England and America. But his sudden, overwhelming fame didn’t bode well for his personal life. Hendrix entertained many different girlfriends wherever he went, reportedly used elicit drugs, and even fathered a daughter.

In the midst of his fame, tragedy struck. Jimi Hendrix was found dead in a London apartment on September 18, 1970. Fans were crushed, the music industry shocked, and loved ones heart broken. But that wasn’t the end of their struggles, as it was soon discovered that Hendrix had left no will.

Hendrix’s estranged father, Al, took control of Jimi’s estate, and set Al’s adopted daughter from his second marriage in control of “Experience Hendrix”—Jimie’s estate. Al also cut out Jimi’s brother from the Hendrix legacy, sparking a court battle that lasted thirty years! Amidst the family struggle for Jimi’s estate, Jimi’s daughter, Tamika, came forward to claim her father’s estate. But since Tamika’s mother was a runaway teenager, the courts did not honor Tamika’s claim to the Hendrix estate, stating that no other US court had recognized her as his daughter.

In the end, the story of Jimi Hendrix’s legacy is marred by the continuous estate battles and fighting amongst his family, perhaps best displayed by his long-time unfinished tombstone in Washington. But all this turmoil could have been avoided had Hendrix taken time to create a will.

At the time of his success, Hendrix didn’t think twice about creating a will. His reckless living leads observers to believe his lack of planning was out of lack of concern about his future. But despite his youth, Hendrix should have planned for the care of his estate.

Here are three situations in which people should take time to create a personal estate plan:

1. After marriage. Marriage is a wonderful event that is preceded by many tasks. From planning the wedding to arranging a living situation and obtaining the wedding certificate, some minor details can get overlooked. One of those details is creating a will.

Once you and your new spouse are settled, take time to seek out an estate lawyer and plan for the care of your possessions should you pass unexpectedly. If you don’t create a will after marriage, definitely do so after having children.

2. After children. The birth of a child brings a couple into a completely different world of responsibility. Not only must they care for themselves, but their child is dependent upon their actions as well. What a wonderful yet overwhelming time!

Should the parents of a child under 18 years of age pass away, the care of their child is designated in their will. But if no will is present, the care of the child falls to the state who will place the child in foster care or other homes. The better transition for a child is if the parents designate a family member or close friend to care for their child.

3. After inheritance or success. Here is where Jimi Hendrix went wrong. Rather than recognizing the fame and monetary gain he was experiencing, he lived for the moment and failed to plan his estate. Of course he didn’t anticipate dying at a young age, but few people do so.

If you’ve come met financial success through your own efforts, come into a large amount of money or inherited possessions lately, take time to either create an estate plan or update your estate plan. The easiest way to assure a simple transition is to carefully plan for the care of your estate.

Posthumous court battles and family arguments can be avoided if you will take the time now to plan your estate. Learn from Jimi Hendrix’s mistake. Even though you might not think you possess much, take the time to create a will and allow an estate lawyer to help you plan for your future and the future of your family.

If you would like more information concerning your estate planning options, www.EstatePlanningSpecialists.com is a comprehensive online resource for personal wealth management solutions through wills and revocable trusts. Whether your estate planning goals are immediate or long-term, a California certified estate planning specialist will be able to counsel you on the best options available to you to meet your individual needs.

What is Probate?

Within the estate planning process, legal terms can be confusing. One such term, probate, is a simple term, but plays an important role in planning for the future of your estate.

gavel Dictionary.com defines “probate” as the following:

“The legal process in which a Will is reviewed to determine whether it is valid and authentic. Probate also refers to the general administering of a deceased person’s Will or the estate of a deceased person without a Will. The court appoints either an executor named in the Will(or an administrator if there is no Will) to administer the process of collecting the assets of the deceased person, paying any liabilities remaining on the person’s estate and finally distributing the assets of the estate to beneficiaries named in the Will or determined as such by the executor.”

Probate is simply the proving of a person’s will for the distribution of assets, done by a probate court. Probate comes from the Latin word probatum meaning “a thing proved”.

The probate process contains a few simple concepts:

1. The deceased person’s Will is taken to probate court and proven valid;
2. The executor of the Will then will settle any outstanding debts the deceased person may have accrued;
3. Next, the executor of the Will distributes the deceased person’s assets to the beneficiaries; and
4. The probate court overseas the administration of the Will by the executor and protects the interest of the beneficiaries.

(It is this last point that drives people to want to avoid probate in California. The court process is so rigid, and has so many mind numbing procedural rules that it takes 12 to 18 months to complete the process at great expense.)

If a person passes away without designating an executor in a Will, one will be appointed to the estate in probate court. A few people purposefully decide not to appoint an executor and leave that process to the courts, but this is rarely the best method of estate planning.

One drawback of the probate process is that every detail of the Will and estate is public record. The value of the estate, lawyer and estate manager’s fees, and the overall condition of the estate is put on record in probate court. Due to mandatory fees, probate can become quite costly, especially compared to the cost of creating a trust to avoid probate.

The best way to prepare for the future is to establish a Will, or better yet, a trust. Such documents can provide an executor specific direction in how to distribute an estate. While it might be the choice of some people to opt out of a trust and allow the probate process to handle estate distribution, this decision should be taken only in rare circumstances. Creating a trust is always the preferred option for many reasons, not the least of which is avoiding the probate process.

Probate can be a time-consuming and confusing process for the person without a Will, but through careful planning and the creation of a good Will, you can remove some of the painstaking processes involved in probating an estate.

If you would like more information concerning probate or other estate planning options, www.EstatePlanningSpecialists.com is a comprehensive online resource for personal wealth management solutions through wills and revocable trusts. Whether your estate planning goals are immediate or long-term, a California certified estate planning specialist will be able to counsel you on the best options available to you to meet your individual needs.

Designate Beneficiaries on Certain Assets

male in white shirt completing a blank formThere are many ways in which hiring an estate planning attorney can help you to navigate the often treacherous landscape of estate laws. One in particular is in understanding the necessity of properly designating beneficiaries for all of your accounts. Regardless of how polished your Will might be, or how clearly you have designated and divided your estate among your loved ones, failing to ensure that the right beneficiaries are noted on your retirement and investment account beneficiary designations could critically disrupt your carefully-laid plans.

If you have created a Will or revocable trust, then you are already taking the right step in securing your family’s financial future in the event of your death. However, what many people do not realize is that much of their wealth is tied up in retirement and investment accounts – each with their own rules for distributing those assets when the owner (you) can no longer claim them.

If you own such accounts – as most people do – it is important that you sit down with a qualified estate planning attorney and ensure that your desires that are outlined in your Will are reflected in the beneficiary designations of your accounts.

• Contact your account holders, especially those of accounts that have been established for quite some time, and inquire about the beneficiaries listed.

• Discuss with your lawyer the proper methods for changing beneficiaries to reflect the desires you have laid out in your Will or trust.

• Include Life Insurance accounts, bank/savings accounts, investment portfolios, 401k accounts, or any account that requires a noted beneficiary. Your estate planning attorney can help you identify those accounts.

• Discuss with your lawyer the possibility of additional taxes that may be added to your assets if beneficiaries are not properly noted.

Often, when people do an inventory of their accounts with beneficiaries, they find beneficiaries listed whom they no longer wish to receive part of their estate (for example, ex-spouses). The beneficiary listed on an account will be given the assets within that account, regardless of what is stated in your Will or trust. Essentially, the laws regarding beneficiary designation override those regarding the settlement of a Will or trust. It is, therefore, always a good idea to discuss with your attorney ways in which you can keep your beneficiary designations up-to-date at all times, especially when you cross important milestones such as a new marriage, a divorce, the death of a loved one, or the birth of a child.

What do I do if the grantor is incapacitated? (Part 2)

If there are minors or other dependents, you will need to look after their care. The trust may have specific instructions. If the grantor’s incapacity is expected to be lengthy, a guardian (of the person, not assets) may need to be appointed by the court. The attorney can help you with this.

Become familiar with the finances. You need to know what the assets are, where they are located and their current values. You also need to know where the income comes from, how much it is and when it is paid, as well as regular ongoing expenses. You may need to put together a budget.

If you cannot readily find this information, others (family members, banker, employer, accountant) may be able to help you. Last year’s tax returns may be helpful. Also, if you discover any assets that were left out of the trust, the attorney can help you determine if they need to be put into the trust and can then assist you with this.

Apply for disability benefits through the grantor’s employer, social security, private insurance and veteran’s services. Notify the bank and other professionals that you are now the trustee for this person. And put together a team of professionals (attorney, accountant, banker, insurance and financial advisors) to help you. Be sure to consult with them before you sell any assets.

Now you can start to transact any necessary business. You can receive and deposit funds, pay bills and, in general, use the person’s assets to take care of him or her and any dependents until recovery or death.

You’ll need to keep careful records of medical expenses and file claims promptly. Keep a ledger of income received and bills paid. An accountant can show you how to set up these records properly. The trust may require you to send accountings to the beneficiaries. Also, don’t forget income taxes (due April 15) and property taxes.

What do I do if the grantor is incapacitated? (Part 1)

If all assets have been transferred to the trust, you will be able to step in as trustee and manage the grantor’s financial affairs quickly and easily, with no court interference.

First, make sure the grantor is receiving quality care in a supportive environment. Give copies of health care documents (medical power of attorney, living will, etc.) to the physician. If someone has been appointed to make health care decisions, make sure he or she has been notified. Offer to help notify the grantor’s employer, friends and relatives.

Next, find and review the trust document. (Hopefully, you already know where it is.) Notify any co-trustees as soon as possible. Also, notify the attorney who prepared the trust document; he or she can be very helpful if you have questions. You may want to meet with the attorney to review the trust and your responsibilities. The attorney can also prepare a certificate of trust, a shortened version of the trust that also proves you have legal authority to act.

You will want to become familiar with the grantor’s insurance (medical and long term care, if any) and understand the benefits and limitations. Assuming the insurance will cover a certain procedure or facility could be a costly mistake.

Have the doctor(s) document the incapacity as required in the trust document. Banks and others may ask to see this and a certificate of trust before they let you transact business.

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