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Frequently Asked Questions

Question: I heard living trusts are expensive.

Answer: A custom estate plan prepared by an estate planning attorney for a moderate-sized estate is affordable and a fraction of the cost of a probate.

Question: How much does my net worth need to be to justify a trust?

Answer: In California, if your gross estate is over $166,250, it may be subject to probate. If you own real property, “gross estate” is the fair market value of your property on the date of death, not your equity in the property.

Question: What is the benefit of a trust versus a will?

Answer: A will might have to go through probate whereas a trust does not.

Question: Can I prepare my own living trust?

Answer: The estate planning field is very complicated and there are many traps for the unwary. Unfortunately, often the quality of an estate plan is not tested until the creator is incapacity or passes away. Then it is usually too late to make any revisions.

Question: I am single. Do I need a trust?

Answer: Not only do you need a trust if your gross estate is over $166,250, you need to have a power of attorney and advance health care directive in place to appoint agents to handle your financial and medical matters if you become incapacitated.

Question: If my spouse and I own our home in joint tenancy, do we need a trust or a will?

Answer: Not necessarily. On the death of the first spouse to die, the property will pass automatically to the surviving spouse. However, unless the surviving spouse creates an estate plan thereafter, the property will pass by the State’s default rules concerning succession. This can be a problem if the surviving spouse does not have legal capacity to create an estate plan or if both spouses perish in a single incident. Also, depending on the size of the estate, significant tax savings can be possible when a married couple creates a living trust.

Question: How long does it take to do an estate plan?

Answer: The normal process involves an in-depth interview, review of drafts, and a meeting to execute the documents. The normal completion time is approximately 30 days.

Question: Once I create a living trust, is everything I own covered by the terms of my living trust?

Answer: No. A living trust can only dictate what happens to property that has been placed in the living trust. After the living trust is created, a second and equally important step must be taken — that of transferring assets into the trust. A person must actually go through the process of retitling assets from the individual’s name into that of the trust, such as having a new deed drawn up for real estate and changing the beneficiary designations on bank accounts, brokerage accounts, IRAs, etc. if consistent with the overall design of the trust. This process is called “funding” the trust. An unfunded trust is virtually useless.

Question: If I prepare a power of attorney, why would I need a will or a trust?

Answer: A power of attorney is effective only so long as the principal (the person creating the power of attorney) is alive. Once the principal passes away, the power of attorney is of no force or effect.

Question: If I put all my assets in a living trust, will my creditors be able to reach my assets?

Answer: Yes. Placing one’s home, financial accounts or other assets in a revocable living trust does not create a shield against the claims of creditors.

Question: If I put my assets in a living trust can I qualify for Medi-Cal?

Answer: When reviewing a Medi-Cal application, the State does not focus on whether property is in a living trust or not. Rather, the inquiry centers on whether the asset itself, or income from the asset, is exempt under the regulations.

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