Estate Planning FAQ

1. Is Estate Planning for me?
2. Can I draft my own will?
3. What are Estate Taxes?
4. What about fees?

Is Estate Planning For Me?

Estate planning addresses the issues that arise if you become incapacitated by either illness or injury, and ultimately when you die. Although this is not a pleasant subject for most people to think about, death is an unavoidable occurrence that each of us will face. By planning in advance, you can make decisions regarding who will be in control of your property as well as who will make your health care decisions if you can’t do so yourself.

A well drafted estate plan will address these issues as well as determine what will happen to any property you own after you die. It will also anticipate many other issues that you might not have otherwise thought about, such as naming the guardian for your minor children, the time and manner your beneficiaries will receive property and minimizing tax liability. How you prepare for the inevitable will have an enormous impact upon you and your loved ones. You can act now to save your family much anxiety later. They will be very grateful that you gave them the guidance they will need to abide by your wishes.

Estate planning is not only for the wealthy. Everyone has an estate. And everyone needs estate planning. At the very least, you should have a Will, Durable Power of Attorney and Advance Health Care Directive. These documents are the minimal preparations you must have to avoid long, frustrating and expensive proceedings in the future. For many people, these documents are not enough. For example, in California, anyone who owns real estate (such as a home or land) should generally create a living trust to avoid a probate proceeding. That is because in California, if you own any real estate or other assets over $150,000, your estate will probably have to go through probate.

Sound complicated? It is when you attempt to handle your estate without the assistance of an experienced estate planning attorney. Although not doing anything now is an option, you are making a decision to leave everything to the discretion of the court. Your family will pay the price, and there are no guarantees that your wishes will be honored. This is why it is so important for you to confront these issues now, before it is too late.

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Can I Draft My Own Will?

The State of California has legislated the distribution of property for those who die without a will. Generally, the property will go to the closest living relatives of the decedent, such as a spouse, children, parents, siblings, etc.

If you would rather be the one to decide who receives your property when you die, you can draft your own holographic or handwritten will. You may also find preprinted forms and kits at your neighborhood stationery store or on the web. The danger in drafting your own will is that should you fail to state your wishes accurately or completely, the results may not be what you intended. In the case of a will, it may be contested. Courts have often ruled in ways that clearly were not what the decedent would have wanted due to an incomplete or defectively drafted will. On the other hand, a qualified and experienced attorney can ensure that the documents you draft will not only meet your goals, but also preserve your estate for your heirs as fully as possible.

Having a will does not determine whether your estate will be subject to probate administration. This determination is based on the character and value of your property, rather than on the existence of a will. The court will need to supervise the distribution of certain property such as that with an aggregate value of over $150,000, or real estate through a probate, even when there is a will stating how the property is to be distributed. An estate planning attorney can instruct you as to whether in your particular situation a will alone is sufficient.

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What are Estate Taxes?

The estate tax is, like the gift tax, a tax on the transfer of property. The estate tax is levied at the time of the death of an individual who passes on property of a certain value to others. The property is valued at the date of death (or six months later, if that value is lower) and allowed certain deductions (such as estate administration expenses, mortgages and other debts, charitable contributions, and property left to a spouse) to determine the net estate. If the net estate is less than the exclusion amount, there is no tax. If the net estate is above the exclusion amount then there is a tax. The tax is a percentage of the net estate above the exclusion amount.

In January 2013 marital portability and the $5 million (with indexed increases) applicable exclusion amount for gift and estate taxes were made permanent. For 2017, it is projected that the IRS will set the applicable exclusion amount at $5.49 million. The top rate for gift and estate taxes is 40%.

Just because an individual has a will or trust does not mean that there will or will not be an estate tax at his or her death. All property passing to a surviving spouse is estate tax free. Property passing to a charity is generally estate tax free. There are other methods of reducing an individual’s net estate to minimize or eliminate the estate tax. Generally, the use of a revocable living trust will provide the maximum protection from estate taxes for the typical married couple.

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What About Fees?

Our fees are set with everyday people in mind and are among the lowest in the field. Typically, legal fees are calculated on an hourly basis or, in the case of probate administration, by law. However, a fixed fee can often be determined for certain legal work at the initial consultation. This includes the preparation of such documents as necessary for a customized estate plan. The fixed fee is determined based on the complexity of your estate planning needs. Generally, a comprehensive estate plan will cost between $2000 and $3000, with more complex plans costing $3000 or more.

You may find companies that sell off-the-shelf plans through seminars, mailers, and telemarketing for less money. Often these cheaper estate plans are a ploy to entice the unwary to purchase insurance or annuities, which may or may not be appropriate for your situation. A “one-size-fits-all” package can have a detrimental effect on your estate plan, and may result in property going to the wrong heirs while costing a great deal of money.

Your estate plan is the final legacy you will leave when you die. It may mean the difference between a grieving family who is supportive of one another and a family bickering over who gets what. You needn’t pay extravagant fees to high priced law firms to ensure peace of mind. However, this is not a time to bargain shop either. Our office provides competent services where we spend the time to educate you on the best options for your unique situation at an affordable price.

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