Protecting the Things That Matter Most
There is a misconception that only millionaires and senior citizens need estate planning. In actuality, almost every adult can benefit from a well-written will or trust. You have the peace of mind knowing your wishes will be carried out after your death, and your family is spared from unnecessary fighting or guessing about your assets.
Whether you are recently married with young children, a senior who is living alone or a retired couple, an experienced lawyer can help you identify estate planning techniques that can be used to protect your loved ones and assets. At Kopper & Morgan, we have over 30 years of experience helping clients in Davis and Woodland and throughout Yolo, Sacramento, and Solano Counties in California, prepare their wills and trusts. Contact us online or call 530-554-9218 to schedule your appointment with our attorney.
Estate Planning Documents
A well-prepared estate plan is often comprised of several legal documents, each protecting a different element of your life. When clients contact us, we help them determine which documents are needed to protect the things in their life that matter. We work with clients to draft and review:
- Wills: A will is used to make sure your children or property are protected if something happens to you. We address issues such as children getting money when they are too young to manage it, appointing guardians to take care of children, and the transfer of property without going through probate.
- Trusts: We will help you to establish the right type of trust for your family needs. Trusts are very important in California because trusts allow estate assets to pass to beneficiaries without probate. Probate fees are very high in California. Because of the rise in the per capita exemption from federal estate tax, many families can now be well served by simple trusts. (See Review and Revision of Estate Plan Documents.) Up until the last couple of years, we recommended the couples with estates that were close to or exceeded the federal estate tax exemption (in 2015 – $5.43 million) have complex trusts such as A-B Trusts or A-B-C Trusts. However, after the Taxpayers Relief Act of 2012, A-B Trusts or A-B-C Trusts became mostly unnecessary. The reason for this is that the Act provides that the unused exemption from federal estate of the first spouse to die may be used by the surviving spouse. This is called "portability."
- Advance health care directives : If you become unable to make decisions for yourself, it is important that there is someone who knows your wishes and can make decisions on your behalf. Advance health care directives and durable powers of attorney allow you to make your wishes known and appoint someone to make decisions about your health care.
- Powers of Attorney: As part of all estate plans, we urge clients to obtain durable powers of attorney for property management. These powers of attorney usually become effective when the principal (the person who gives the power of attorney) becomes incompetent. The powers of attorney are called "durable" powers of attorney because they survive the principal's incompetence, while ordinary powers of attorney do not. The powers of attorney will allow your agent (usually your spouse) to open and close bank accounts and enter into contracts for you if you are incompetent.
- Trust administration: We assist people in completing the accounting that is necessary for trusts, making sure all legal requirements are followed. Managing a trust is complicated, so it is important to work with a lawyer who has a good understanding of the financial and legal elements involved.
- Probate: If you are responsible for probating an estate, you may feel overwhelmed. We help clients manage the estate efficiently. This includes complying with legal requirements and proactive management to avoid unnecessary taxes.
- Elder law : We work with seniors and their families to make sure their rights are protected. There are various care situations available, and we help clients plan for the assistance they may need later. If you think there is a possibility that you will need a skilled nurse, we can help you plan ahead to protect yourself and your loved ones, while preventing your health care costs from draining your savings.
- Business succession: If you work in a small company or own a family business, we can help you make a plan for the business's succession. We help clients draft buy/sell agreements and use estate planning to avoid unnecessary taxes.
Always make sure that your trust is fully funded with the assets that you own. Too often people create a living trust and forget to contact their banks and brokers and make sure that their accounts are held in their name as trustees of their trust. If more than $100,000 of assets are left out of the trust, a probate may be necessary. This defeats the primary purpose of a living trust, which is to avoid probate.
Upon the death of a grantor (the creator of a trust), a trust becomes irrevocable. The person who acts as the trustee of an irrevocable trust in California acts as a "fiduciary" and is responsible for performing the legal duties of a trustee as required by law. If the trustee fails to do so properly and is challenged in court, he or she may be liable for trust losses. Also, the trustee may have to pay all court costs involved in settling the case, including the legal fees for both sides. It is therefore important for a trustee to fully understand his or her duties.
When the trust becomes irrevocable, the trustee is required to provide a specific notice to anyone who has an interest in the trust as well as to all the heirs at law of the deceased. This notice, whose language is specified by law, advises the recipients that they have 120 days to contest the trust by court action and that they may request from the trustee a copy of the trust and any amendments that have been made to it. If the trustee fails to issue this notification, he or she may become liable for legal actions.
Also, a notice must be sent to the county assessor for every parcel of real estate that is owned by the trust. The notice informs the assessor of the change of trust ownership whether or not the property is subject to reassessment for California real estate taxes.
The assets in the trust must be placed in the successor trustee's name. The real property as well as the trust accounts must be placed in the new trustee's name. If the trust was under the creating party's Social Security Number, the trustee must complete Internal Revenue Service form SS-4 to obtain a Tax Identification Number for the trust. The new tax I.D. number may be obtained over the Internet, or the form may be sent to the local IRS center, which will issue the number. The tax I.D. number, once received, will be used for all trust accounts and for all trust income tax returns.
The legal duties of a trustee are set forth in the California Probate code, sections 16000-16042. These duties include:
- Administer the trust in accordance with the trust's provisions.
- Value the trust assets. This often requires the trustee to obtain appraisals of the property of the trust.
- Administer the trust solely for the benefit of the beneficiaries or beneficiary of the trust.
- Deal impartially with the beneficiaries if there are two or more.
- Avoid using any asset that is the property of the trust for the trustee's benefit or profit.
- Avoid becoming a trustee of another trust that has adverse or conflicting interests with the current trust.
- Keep trust assets registered in the name of the trust and separate from any assets the trustee may own.
- Avoid delegating to others the trustee's duties. However, the trustee may obtain the assistance of other professionals such as accountants, investment advisors, and lawyers.
- Take reasonable steps to preserve and control trust property.
- If there are co-trustees, participate with them jointly and do not to turn over administration of the trust to one of them.
One of the most important aspects of administering a trust is for the trustee to keep good records of all transactions. The trustee should keep all receipts, all bank statements, all cancelled checks, and records of income from all sources. The trustee usually has to account to the beneficiaries and furnish information when the beneficiaries request it. Good financial records make the accounting easier and ensure that the trust administration will go smoothly.
It is a good idea to consult a lawyer through the trust administration process. Many people believe that the purpose of a living trust is to avoid probate and lawyers. While it is true that the legal fees associated with administering a living trust are much less than with a probate, spending some money consulting with a lawyer can save the trustee a number of headaches and sometimes avoid legal problems.
Planning for the future does not need to be an overwhelming experience. Contact us online or call 530-554-9218 to work with a lawyer who will approach your situation with compassion.
If you are a Trustee keep meticulous records. Keep all receipts for bills that you pay. Pay bills with checks and not cash. Keep complete records of all income the trust receives. Balance the checkbook each month. Work with an experienced CPA to prepare the Trust accounting and tax returns.