Why would I want a trust?

If you own an interest in California real property or if your real and personal property totals more than the threshold dollar amount to trigger a California probate proceeding (in 2021, this amount is $166,250), then you should consider whether a trust would benefit you.  Property held in a trust will not be part of the creator’s estate for probate and tax purposes.

In addition, if you have minor children, it is worth thinking about how you would want them to manage their inheritance if you were not here to guide them.  For instance, would you want your child to receive their entire inheritance, outright and without any guidance or restrictions, when they turn 18?  That is what will happen under California law, unless you have left an estate plan with different instructions.

What is a living trust?

A living trust is a powerful estate planning tool that allows its creators to hold their personal and real property, use that property for their own benefit during their lifetimes and then direct what happens to the property when they pass away.  If the terms of the trust can be changed while its creator(s) are living, it is a revocable trust, popularly known as a living trust. 

If the terms of the trust cannot be changed once it is signed, then it is an irrevocable trust, which is a different type of trust that can be useful for certain assets and situations.  Trusts are used to provide as easy a transition as possible for the creators’ loved ones, with the goal of avoiding probate and minimizing tax burdens.

What information do I have to share for an estate plan?

An effective estate plan requires information about your family and your assets.  While account numbers and exact balances do not need to be disclosed, the attorney advising you on estate planning matters needs an accurate sense of the size of your estate, the property owned, and the complexity of your family situation, because these things can dramatically impact the advice given.  JDS Law provides clients a confidential Estate Planning Questionnaire to help them gather and organize the necessary information, including the following:

  • Copies of current estate planning documents;
  • Names and addresses of your children, parents, and siblings;
  • Grant deeds to real property, including the legal description of the property;
  • Business agreements such as operating agreements, succession agreements, and buy sell agreements;
  • General account information for all financial accounts;
  • Stock certificates and bonds;
  • Information about insured assets; and
  • Marital contracts or divorce settlement documents impacting your estate plan.

JDS Law takes the security of your sensitive information and our ethical responsibility to maintain the confidentiality of our clients very seriously.  We offer clients an encrypted and password-protected portal that allows us to securely exchange information, including the Estate Planning Questionnaire, documents, messages, invoices and more.

My family knows what I want. Do I need a formal estate plan?

Without a valid estate plan in place, those holding your property, such as your bank or mortgage company, may not have authority to recognize your wishes.  Then your survivors will have to seek court supervision to administer your personal affairs.  Even a “small estate” proceeding will take many months and, if you are facing a full-blown probate, it will be at least one to two years, and require several thousand dollars in fees and costs, before the person administering the estate will be able to distribute your property, even for the simplest estate.

What if I don’t have an estate plan when I die?

There is nothing like a devastating global pandemic to make us ponder our own mortality.  We all hope for the best, but it is important to be prepared for whatever comes.  If your wishes do not line up with the California Probate Code and you do not have a valid estate plan (will or trust) in place when the time comes, the state will have no choice but to give your property to your next of kin as defined by California law.

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