By Dave Coen – along with information provided by Jillian C. Kinsey, Esq. Albrecht & Barney attorneys
Having a team of professionals working together on your behalf is something that I recommend to my clients. I would suggest that your Financial Advisor, a Competent CPA, and a Trust Attorney are 3 essentials for many families, no matter how small you think your nest-egg is.
In many cases, the Financial Advisor acts as the quarterback in coordinating the information for this team. Many times I join my clients in their meetings with the Trust attorney to set up their Trusts as well as in meetings with their CPA. Each time I am reminded why there is a need for setting up a Trust for most families.
Estate planning — the necessary evil that forces us to focus on the two things we most want to avoid in life — death and taxes. There is a common misconception that only rich people need estate planning. Estate planning is really an opportunity — it is an opportunity to take care of your family in a way that can help them when you can no longer do it personally.
Here are some reasons why I might Definitely Need an Estate Plan and Trust
There is a common misconception that only rich people need estate planning. It is true that most people will not be subject to the estate tax at current levels. However, proper estate planning does far more than avoid estate taxes.
- It saves you Time, Money, Headaches
- It can protect your assets and financial continuity
- It can save capital gains and property taxes
- It can protect your children and other heirs from the State mandated probate and decisions as to who will raise your children
Keep in mind, that an estate plan does not just include documents that pertain to your death — a Will or a Trust. An estate plan also includes documents that pertain to your life — a Power of Attorney.
Benefits of a Living Trust
- A Will does not avoid probate, it simply instructs the judge to whom and how you want your estate distributed.
- A Trust, on the other hand, avoids probate. A living trust can be thought of as a Will that avoids probate.
- Trusts also create protection for you and your loved ones – creditor protection, divorce protection, and protection from receiving money and responsibility at too young of an age.
The Four Reasons You Want to Avoid Probate
Is your home worth more than $150,000 in gross value (no matter what your mortgage value is) If yes, then without a Trust, in California, your estate will be subject to probate and it could cost your heirs hundreds of thousands of dollars.
Probate is a proceeding in which the court supervises the distribution of the estate. This supervision comes with mandatory costs, numerous hoops to jump through, and constant delays when you might need the money most.
- COST
Attorney Fees, court costs, a probate referee
In probate, attorney fees are determined by statute, based upon the gross value of the estate. If, for example, you own a $1,000,000 home that has a $800,000 mortgage, the probate fees are based on $1,000,000, not $200,000 of equity. In this case, probate fees would eat up over 23% of what you thought you were passing to your family. In addition to the attorney fees, probate referee fees can be up to $10,000.
- TIME
The average probate in Southern California is 1½ – 2 years, and even the shortest/simplest probates last approximately 9 months. In the meantime, your family will be waiting for access to your estate.
Trust administrations can typically be completed within 6 months.
- PRIVACY
Wills that are probated become public documents. Probate proceedings themselves
are public proceedings. This means that anyone who walks into the court and asks to see your Will is able to see what you have done. In contrast, a living trust is a private document the terms of which are only made known to your named beneficiaries and heirs. The lack of privacy can also leave your beneficiaries subject to predators. The names of your beneficiaries, their age, how much they are receiving, and even where they live, all becomes public knowledge.
- PROTECTION
Depending on the size of your estate and the ages of your beneficiaries, it may be beneficial to include additional protection in the trust document. Holding assets in trust for your beneficiaries, as opposed to distributing them outright, protects the assets you have worked so hard to accumulate and pass on to your loved ones. It can provide protection from creditors, divorces and youthful decision-making, and helps make sure the assets are used to support your beneficiaries the way you intended.
It can provide:
- Creditor Protection
- Divorce/Spouse Protection
- Distribution protection
- Proper Age
- Proper Use
Are you over 18?
You too need an estate plan, even if you don’t have minor children, even if you have no assets at all, you still should have a Power of Attorney and you should definitely have an Advanced Health Care Directive. If you become incapacitated, you should have all of life’s important decisions dictated by you — not by the State of California
Let’s Talk
Please feel free to contact me if you would like to discuss how we can help you with your family’s plan either in person, over the phone or on Zoom
About Dave
Dave Coen is a Financial Advisor with SageView Advisory and the CEO of College Planning America. Along with his retirement financial industry experience, he is a College Planning Specialist. He works closely with individuals and families to provide comprehensive financial planning that addresses all elements of their financial picture. Learn more by connecting with Dave on LinkedIn.
Jillian C. Kinsey, Esq. Albrecht & Barney attorneys – 1 Park Plaza, Suite 900, Irvine, California 92614
Phone: (949) 263-1040 jck@albrechtbarney.com
SageView Advisory – 1920 Main Street, Suite 800, Irvine, CA 92614 Tel: 714-813-1703
SageView Advisory Group, LLC is a Registered Investment Adviser. This report is for informational purposes only and is not a solicitation to invest. Advisory services are only offered to clients or prospective clients where SageView Advisory Group, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future results. No advice may be rendered by SageView Advisory Group, LLC unless a client service agreement is in place. CA insurance license #0G82578
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