Estate Planning Elements And Tools
An estate plan prepared by Doyle Quane contains a full suite of documents personalized to you, prepared by a team that gets to know you and your family. The core estate planning documents that our office will assist you with are as follows:
- Revocable Trust
- “Pourover” Will
- Advance Health Care Directive
- Durable Power of Attorney for Assets
- Nomination of Guardian for Minor Children (if applicable)
In addition to the above, Doyle Quane will provide you with several supplementary documents that are necessary to transfer your assets into your trust. Our team will work with you to ensure your assets are properly retitled in the name of your trust, and will remain in contact with you as your life – and your estate – evolve over time.
We also represent people facing trust or estate litigation for any reason, such as in the case of a will contest.
Why Do You Need This Type Of Estate Plan?
There are two reasons that a Revocable Living Trust fits most estate planning needs. First, the revocable living trust facilitates probate fee avoidance. Probate fees are substantial; for example, probate fees can exceed $40,000 for an estate with a gross value of $1,000,000.00. Any assets that are transferred into the trust during the life of the client are not included in the probate estate and avoid inclusion in the probate fee calculation. Second, trust administration is usually simpler, faster and more private than estate administration through a public probate process.
Clients frequently ask if managing assets during their lives through a trust is more complicated than not doing so. The answer is no, assets held in a revocable living trust are managed the same way that assets that are not in a trust are managed. Assets are transferred into the name of the trust, and from that point on are accessed, spent, saved, moved just as the assets were before the transfer. Because establishing a revocable living trust is a wise decision for the vast majority of Californians, revocable living trusts are very common and very mainstream. Banks and financial institutions are completely familiar with the trust method of holding assets and are very accommodating in helping clients to change title to their assets.
What Will It Cost?
A married couple can expect legal fees for their estate planning design and documentation to be approximately $3,500 provided they desire the same disposition of assets. A married couple with separate children or otherwise requesting different dispositions of their assets can expect legal fees of approximately $4,000. A single person can expect legal fees to be approximately $2,700, depending on the complexity of their estate disposition instructions. More complicated estate plans, developed for clients with taxable estates, multiple properties, complex business interests, or special needs or desires, cost more.
How Long Will The Process Take?
The first meeting with the attorney takes one to one and one-half hours, in order to learn more about estate planning and to talk about specific distribution options. The attorney then drafts the estate planning documents over the next week. A second office meeting of an hour to an hour and half takes place about one week later for final questions, changes and signing.
Our office will remain available over the years to assist you in your estate planning or other legal needs. It is our goal to make you feel comfortable and confident with our ability to address your estate planning and other legal needs.
Can My Estate Planning Be Done Virtually?
Your entire estate planning process can be done from the comfort of your own home using our virtual estate planning process. Our estate planning attorneys are fluent in the technology and protocols necessary to ensure a seamless virtual estate planning experience. We achieve this by conducting all virtual estate planning meetings via Zoom. We deliver our client’s draft estate planning documents electronically within a week of receipt of their completed questionnaire. At our next virtual meeting, we use Zoom’s screen sharing functionality to review the documents in the same manner we would in person. Execution is then handled on a case-by-case basis depending on the client’s preferences: we can deliver the full suite of documents to the client’s home for them to execute in front of a notary nearest them, or clients can work with our team to arrange for alternative execution accommodations led by our team at our offices or a location of the client’s choosing.
Do I Need To Update My Current Estate Plan?
There are a number of events that may require you to update your estate plan. A change in your family relations, economic position, employment status and external factors requires an evaluation of your estate plan to determine whether it should be changed. See the lists of examples below.
Changes In Family Relations
- Dissolution of marriage
- Death of a spouse
- Changes regarding a child, grandchild or another beneficiary
- Birth of a child
- Death of a child
- Marriage of a child or dissolution of a child’s marriage
- Adoption of a child
- Medical issues of a beneficiary
- Substance abuse issues of a beneficiary
- Financial irresponsibility of a beneficiary
Changes In Economic Position And Employment Status
- A substantial increase or decrease in asset values
- Change in insurability
- Change of employment
- Change in business interests
- Property acquired
- Change in health or health of spouse
- Changes in laws
- Change of residence out of state
- Death of executor, trustee or guardian
It is especially important for married couples with estate plans executed prior to 2012 to have their estate plans reviewed in light of the introduction portability of the deceased spouse’s unused estate tax exclusion. Many estate plans drafted before this change require the mandatory funding of a bypass trust upon the death of the first spouse, which may lead to unnecessary administrative expenses and taxes.
Why Avoid Probate?
If you die without an effective estate plan in place in California and have assets exceeding $150,000 (as indexed for inflation), your estate will need to be administered by the state through a process called probate. Probate is the legal process of passing property from a deceased person to their beneficiaries or heirs. Probate is necessary to transfer title to property such as bank accounts, real property and automobiles which the decedent owned at death. A personal representative, an executor, if named in the will, or an administrator, if appointed by court, will be approved by the court to probate the decedent’s estate. The personal representative’s duties include notifying all creditors of the decedent’s death, filing an inventory and appraisal listing all assets, and the court-appointed referee will appraise the assets. The personal representative also must file the decedent’s tax returns and pay any taxes from the estate. Approximately a year after the probate process is initiated, the personal representative will file a final petition for probate along with a final accounting and if the court approves, a final order of probate is entered.
The probate process can be very cumbersome, time-consuming, public and expensive. A properly created estate plan can avoid the process in its entirety and save the decedent’s beneficiaries a great deal of time and money. The probate process generally takes a year to complete so long as the procedures detailed in the paragraph above are properly completed. An additional drawback of the probate process is that probate entirely lacks privacy as the filings with the probate court are a matter of public record. Most importantly, the probate process can be very expensive, especially in the case of larger estates.
The probate code provides for a sliding scale for attorney and administrator fees. Probate Code Section 10810 provides that the attorney for the personal representative shall receive fees equal to 4% of the first $100,000 of the estate; 3% on the next $100,000; 2% of the next $800,000; 1% on the next $9,000,000; one-half of 1% on the next $15,000,000; and a reasonable amount to be determined by the court for all amounts above $25,000,000. Probate Code Section 10800 provides that the personal representative is also entitled to fees in the same amount. Additional fees may be awarded for extraordinary work.
The chart below demonstrates the combined attorney and personal representative fees for difference size estates:
|Estate Value||Combined Attorney and Personal Representative Fees|
How Trusts Avoid Probate
A properly drafted and executed estate plan can avoid the probate process. The deceased person’s assets will be in the trust and the successor trustee will have the task of distributing the assets according to the trust’s instructions. This process is referred to as trust administration and although it is not without some cost, it will generally result in substantial savings when compared to the probate process. The trust administration is also carried out in private and it is not made public record like probate. There are no statutory waiting requirements to distribute assets of a trust unlike probate’s requirements. Also, there is no court supervision, so the successor trustee does not have to go to court and receive permission before acting.
Will My Estate Have To Pay Taxes Upon My Death?
The federal estate tax is levied at a rate of 40%. The estate tax is applied against the deceased person’s gross estate which is defined as everything the decedent has beneficial ownership in at the time of their death. The assets of a revocable living trust are included in the gross estate and subject to estate tax. Assets that transfer to a spouse or charity escape payment of estate taxes. Estate taxes are levied upon the assets in the estate which exceed the lifetime exclusion (unified credit) amount which is set at $11,580,000 for 2020 and indexed for inflation.
The federal gift tax is also levied at a rate of 40%. Every person has a $11,580,000 gift tax exclusion for 2020 and indexed for inflation thereafter which allows transfers up to this amount without incurring gift tax. As a person uses up their gift tax exclusion, their estate tax exclusion is reduced at a dollar for dollar rate. Additionally, an annual gift tax exclusion allows for gifts up to $15,000 for 2020 and indexed for inflation per recipient to be made without incurring gift tax. Gifts to a spouse and charity are also exempt from gift tax. The gift tax is preferable to the estate tax because the gift tax is exclusive while the estate tax is inclusive.
The generation-skipping tax (GST) is levied at a 40% rate on transfers to grandchildren or more remote heirs. Every person has a GST exclusion which allows for transfers up to this amount to grandchildren and others of a “skip” generation without incurring tax. The GST exclusion for 2020 is $11,580,000 and it is indexed for inflation thereafter.