Estate Planning, Trust Administration and Probate

REVOCABLE LIVING TRUSTS: You transfer assets into a trust for your own benefit during your lifetime. You can serve as trustee or select a professional trustee. This helps facilitate management of your assets upon your death or incapacity.  You also avoid probate and keep family matters private.

WILLS:  With a will, at least you create a "wish list" of where you want certain assets to go.  If you choose just a will, your estate may have to go through probate. Probate is a court-supervised process to protect the rights of creditors and beneficiaries and to ensure the orderly and timely transfer of assets.

DISCLAIMER TRUSTS:  Provides for funding of a trust by the surviving spouse for estate tax saving purposes. The surviving spouse can determine the amount of assets to be put into the trust after the deceased spouse's death. The trust provisions can be drafted to provide for trust income payments to the surviving spouse and for access to the trust assets by the surviving spouse when required to maintain the surviving spouse's standard of living or other IRS-approved reasons.

BYPASS TRUSTS:  This type of trust will automatically provide for the creation of a trust to prevent inclusion of assets in the surviving spouse's estate at death. These assets would otherwise be subject to estate taxes. This type of will relieves the surviving spouse of the decision making required to put assets into a trust under a disclaimer trust will. In addition, the automatic transfer of assets into a trust will assure that remaining trust assets pass to the surviving children rather than the wife or husband of the surviving spouse if there is a remarriage.

PROBATE: Probate is the process the court uses to supervise the transfer of assets from a person who has died to the new lawful owners. But first, the court must ensure that all of the decedent's debts and taxes are paid.

TRUST ADMINISTRATION:  If the person has passed away, trust administration involves the process of properly identifying and collecting the trust assets, legal notification to the beneficiaries (even if they are all family members), identification and payment of legitimate debts, providing trustee accountings of the trust financial activities, fiduciary tax returns, and valuation of assets for possible estate tax returns and ultimately proper distribution to the beneficiaries.  If a spouse has passed away, the surviving spouse must revisit the terms of the trust to determine what, if any, action must be taken due to the death.  It is very common that the trust must be divided into two (or more) sub-trusts for tax purposes or other reasons.  The terms of the trust will state what actions must be taken.

QTIP TRUSTS:  Qualified Terminable Interest Property (QTIP) trusts may be appropriate in larger estates.  They also allow you to ensure that your assets will ultimately pass to your chosen beneficiaries while providing your spouse with income from your trust for the remainder of his or her lifetime.

CHILDREN'S TRUSTS:  Can be used by parents to arrange for assets to pass to children through a trust. The trust can provide for financial management of the trust assets by a trustee after the parents' death.  Parents can designate certain ages at which their children are to receive their assets.  This can be quite beneficial since people tend to squander their assets if inherited too soon.  The possibilities for disbursement are quite varied and every family is different.   The child's trust can be drafted as an addition to the provisions contained in a basic will so that separate documents are unnecessary.

Conservatorships:  A “conservatorship” is a type of legal proceeding where the court grants legal authority to a person (called a “conservator”) to act for an impaired or incapacitated person (called a “conservatee”).  Sometimes individuals require another trusted person to act for them due to dementia, stroke, illness, accident, or other limitation. 

special needs trusts:  A Special Needs Trust is a special kind of trust which holds title to property for the benefit of a child or adult who has a disability. The Special Needs Trust can be used to provide for the needs of a disabled person to supplement benefits received from various governmental assistance programs including SSI and Medi-Cal. A trust can hold cash, personal property, or real property, or can be the beneficiary of life insurance proceeds.

special litigation trusts:  When a plaintiff with special needs obtains an award or a settlement in a personal injury case, those proceeds often need to go into a Special Litigation Trust so as to not disqualify the person from any government benefits available. 

Guardianship:  This is when a judge gives someone that is not the child's parent custody of the child or the right to control the child's property, or both. To become a guardian, you must file a petition, and the court has to approve it.  In your Estate Planning documents, you can nominate someone to care for your children if you are unable to do so.  Otherwise the court will choose someone without your input.

Irrevocable life insurance trusts: With an Irrevocable Life Insurance Trust (ILIT) the proceeds of your life insurance policy pass into trust and are not taxed in your estate. These trusts may be complex and should be handled by an expert in trust administration. A properly structured ILIT could save you up to 50% in estate taxes on insurance proceeds.

Durable or general powers of attorney:  This is a document,\ that everyone over the age of 18 should have.  Even if you become disabled, this allows another person to handle your legal affairs without having to go to court.  The durable power of attorney is a document by which you give another person the power to act on your behalf, (i.e. manage your business affairs, sell property, buy property etc.) even if you later become incapacitated.  A durable power of attorney gets its name from the fact that the person appointed has the power to act for you even if you become disabled.

Living wills (Advance Health Care Directives):  An "advance health care directive" lets your physician, family and friends know your health care preferences, including the types of special treatment you want or don't want at the end of life, your desire for diagnostic testing, surgical procedures, cardiopulmonary resuscitation and organ donation.   By considering your options early, you can ensure the quality of life that is important to you and avoid having your family "guess" your wishes or having to make critical medical care decisions for you under stress or in emotional turmoil.

Nominations of guardian for children:  In your Estate Planning documents, you can nominate someone to care for your children if you are unable to do so.  Otherwise the court will choose someone without your input.  Generally, you can use a stand-alone document that addresses a variety of issues relating to raising your children.  These document can be tailored to your specific needs.

Beneficiary designations:  Using beneficiary designations, you can arrange for the transfer of your assets through contractual arrangements, such as those commonly found with insurance policies, IRAs and employee benefit plans.   There are many considerations that are involved and you should think very carefully about who you choose to be a beneficiary.