Category Archives: Estate Planning

What happens if you don’t have a Will when you pass?

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What happens if you don't have a will when you pass?

What happens if you don’t have a will when you pass?

What happens to your estate if you don’t have a valid Will or Trust when you pass?

The answer to that question will partially depend on what state you resided in. If you die without having a valid will or a trust, your assets will pass by State laws of intestate succession and likely undergo the probate process.

Probate is a state court administered process that transfers the estate of a deceased individual to named or remaining heirs. An estate is made up of the decedent’s real estate, personal property, life insurance, bank accounts, investments and personal belongings. In probate court, an administrator is appointed by the court as a representative to collect the assets, settle any outstanding debts and then distribute any of the decedents (the person who passed) remaining assets to the beneficiaries. All matters of probate are reviewed by the state court. Each state has their own probate laws that dictate how the affairs of an estate are to be handled. Depending on the state (where the decedent resided), area and the complexity of the estate; probate can take anywhere for seven months to multiple years to complete. Probate proceedings are a public record.  Anyone can access information about your estate and beneficiaries once it enters probate. The process can take from six months to several years to complete and your beneficiaries may not receive their inheritance until the probate is completed.

For this reason, it is highly advised that you create either a will or a revocable living trust if you do not currently have one. A will is a legal document that provides instructions for what should happen to a person’s assets after his or her death. This term “last will and testament” is commonly used to mean the same thing as a “will”, but to be exact, a last will and testament refers to the most recent version of a will. A will is commonly used to distribute a personal property, real estate, investments or business interests. It may also be used to appoint legal guardians. If a person dies without a will, they are said to be intestate, and state intestacy laws govern the distribution of the property of the person who passed. A trust is an arrangement whereby property is legally owned and managed by an individual or fiduciary as trustee for the benefit of another who is referred to as a beneficiary, who is the owner of the property.

Estate Planning – Most important items!

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Estate Planning, Things You Must Do!

The most important items in estate planning!

Estate Planning Must Haves

This Estate Planning Guide article covers the the most important, must haves in estate planning. It will provide you with an overview of what you will want to keep in mind as you begin your estate planning journey or try to tighten up what you already have in place. There are a great many benefits of having a comprehensive plan for your estate developed . Some of the benefits include:

  • The minimization of taxes, court costs, and legal fees
  • The naming of an executor to handle the affairs of your estate
  • Instructions for your care and financial affairs, should you become incapacitated before death
  • Avoiding the need for probate
  • The ability to keep your estate matters private as opposed to publicly assessable
  • The naming of a guardian for the care of any non-adult children or children with special needs
  • An of course, specifying how and to whom you would like your assets will be distributed

So where do you begin and what are the most important items to consider when creating an estate plan?

Inventory of your estate

Always begin with the fundamentals! In estate planning, one of the primary fundamentals is having a complete list of what assets you own.  You will want to make a complete inventory of all of your assets. Begin by creating a list to document your personal effects, insurance policies, stocks, bonds, bank accounts, automobiles, real estate and business interests. You can find a sample of an estate planning inventory spreadsheet in the tools section of our website located here. Make you listing of assets as complete as possible. Doing so will be both helpful for you and whomever you will designate as the executor of your estate. For personal effects such as jewelry, furniture, heirlooms, collections…. we suggest including an item description, item location, estimated item value, and the name of the beneficiary(s) that you would like to transfer to item to at the time of your passing. When creating an inventory of items such as bank accounts, bonds, stocks, retirement funds, insurance policies… We suggest documenting the financial institutions name, address, representative you work with (if any), phone number, account number, policy number, account type, balance and in what portions you would like to have these assets distributed to your beneficiaries. You may want to add notes for any items that could benefit from additional clarification. For motor vehicles such as cars, boats, and or real estate such as your primary residence, a second home, land; we recommend documenting the address, how title is held, the purchase price, the estimate current value and how you would like the assets to be distributed to your beneficiaries. You may also want to consider including information about your property tax assessment as well. In states such as California, you may be able to transfer a low property tax assessment to the child or children who you are leaving the home to.

Create a list of your liabilities

When a person passes, any debts they had when they were living will need to be paid or settled. Without a living trust, an estate will likely enter probate. During the probate process debts and liabilities will need to be settled. If you have a trust and your estate is able to avoid probate, the executor of the trust / estate will still need to pay-off your debt or settle with creditors. If you create an organized and complete list of your existing liabilities, it will make the process far easier for whomever is handling the debt settlement aspects of your estate.

Much like with the estate inventory assets list you created, you should be as detailed as possible with your estate liabilities. You will want to list items such as credit cards, personal loans, auto loans, judgements and real estate mortgages. On your list you will want to include information such as the creditor name, contact person (if any), phone number, address, account number and the amount of outstanding debt. Any supporting documentation for the debt, such as a mortgage note or contract should also be included / kept with your list of liabilities. You may also want to include information for your home utilities, to simplify the maintenance of your home during the probate / distribution process.

Seek professional assistance with your estate planning

Depending on your family situation, the amount / type of assets you own and your directives for finances and health care, estate planning can get pretty complicated at times. Making a significant mistake can be costly. At this phase of the estate planning process, it likely will make sense to seek the assistance of an estate planning professional such as an estate planning attorney.

In the United States, each individual state decides how it handles its own estate and probate matters. For this reason it makes sense to find an estate planning lawyer familiar with the laws of the state you reside in. A good estate planning professional will be able to give you guidance and advice on all aspects of your estate planning needs. Some examples may be if a last will and testament or a living trust makes more sense for your situation. Should you have powers of attorney drafted? How long does the probate process typically take in your county? An estate planning attorney will be able to answer all of these questions as well as draft legal documents for you.

Determine if a will or trust is best for you

You are going to want to determine if it makes more sense for you to utilize a last will and testament or perhaps a more elaborate estate planning tool such as a revocable living trust. A will or last will and testament, is a legal document that provides instructions for what should happen to a person’s assets after his or her death. The term “last will and testament” is commonly used to mean the same thing as a “will”, but to be exact, a last will and testament refers to the most recent version of a will. A will is commonly used to distribute a personal property, real estate and investments. It may also be used to appoint legal guardians for minors or people with special needs. If a person dies without a will, they are said to be intestate, and state intestacy laws govern the distribution of the property of the decedent. A revocable living trust is a legal arrangement that allows a person’s assets to be held and managed by a third party. This third party is known as a Trustee. The Trustee is the person or group of people that are responsible for ensuring that the estate is handled in the manner specified in the trust documents. There are several purposes for an estate planning living trust, but one of the more common reasons people choose to use a living trust is to make sure their assets are distributed how they wish and to avoid the need for probate.

Deciding on a trust or will for your estate planning needs often boils down to a few things. With a trust, the information about your estate stays private and confidential. When a will is used, information about your estate is made public during the probate process. Another factor is cost. A living trust is typically more expensive to setup and maintain over time than a will. A will can be created very inexpensively and even potentially at no cost. You can find samples of wills online with the help of online resources (just make sure the will meets the minimum requirements of your state to be deemed valid in court). Lastly, depending on the state you reside in, if you have very few assets, a will may be sufficient to avoid the probate process. A capable estate planning lawyer can help you decide what the best option for your situation is.

Establish your directives and power of attorney documents

A comprehensive estate plan accounts for more than just how your assets will be distributed. Advance health care directives are legal documents that provide guidance to your family, and medical providers regarding your health care when you are incapable of communicating this information yourself. For instance, if you are physically or mentally incapacitated, an advanced health care directive can specify your wishes regarding the medical care you would or would not want to receive in different situations. An advance healthcare directive may also communicate additional medical preferences such as if you wish to be an organ donor or wish to donate your body to medical science. Commonly, a medical power of attorney or health care agent form is used in conjunction with an advance health care directive. A medical power of attorney is a legal document that allows you to appoint a person to make healthcare / medical decisions on your behalf in the event that you are unable to make them for yourself.

In addition to having a person to make difficult medical decision on your behalf, you should also consider having someone to make financial decisions on your behalf as well. In estate planning, you can utilize a power of attorney to authorize a person of your choosing to handle financial matters on your behalf if you become incapacitated. A power of attorney has some flexibility. For instance, you can design a power of attorney to become active only in the situation that you are incapacitated. You may also choose to create a power of attorney that goes into effective immediately if you are in the early stages of a degenerative disease. A power of attorney only applies to the specific powers you authorize in the document and it is only valid during your lifetime. The rules governing directives and power or attorney documents change from state to state. We encourage you to have a conversation with an estate planning expert that is familiar with the laws of your state to determine what the best options for your personal situation are.

Designate a reliable estate executor, trustee or administrator

The naming of an estate executor is one of the most important purposes of a will. The executor is the one to carry out the final wishes of the decedent as specified in the will. For this reason, it is important to choose someone whom you trust and is competent to handle such an important and potentially difficult task. The executor of an estate must be at least 18 years old and mentally sound enough that the court will be comfortable letting them handle the estate affairs. A court can remove an executor for committing fraud, embezzlement or for the misadministration of as estate. For this reason, it is suggested that you choose someone who is honest, trustworthy and if possible respected by the beneficiaries named in your will or trust. We recommend that before selecting your estate executor, you speak with them. Make sure that they are willing to serve as your executor and that they understand how you would like the different aspects of your estate carried out.

List your beneficiaries

Selecting the family members or loved ones who will receive your property upon your passing is one of the most personal and important acts carried out by a will or trust. To do so, you will need to designate your beneficiaries and specify what property they will receive in your will or trust. A beneficiary is a person who will receive the benefit of personal or real property from a trust or estate on behalf of a benefactor (decedent) or settlor (the person who created the trust). For example, the beneficiary of a life insurance policy is the person who receives the payment of the amount of insurance after the death of the insured. If you are drafting your own will, you should be as detailed as possible when naming your beneficiaries. Do your best to provide a person’s full legal name, date of birth (if available), address, phone number and their relationship to you (brother, spouse, child, friend…). The more complete your information is, the more likely your property is to be distributed as you desire and the easier the task will be for your estate executor or administrator.

If a charity is important to you, you can also designate that charity as a beneficiary in your will or trust. What can you donate to a charity in your will? Most commonly money is left to a charitable organization since it makes it easier for the charity to accept the donation, but many will accept other forms of donation such as stocks, bonds, real estate or even a vehicle. Once again, be as thorough as possible when it comes to detailing the information about the charitable beneficiary. Try to list their full name, street address, phone number and Employer Identification Number (if available).

Keep your estate planning documents in a safe place

Even the best drafted will is useless if it is lost or destroyed. For this reason, once you have completed the creation of your will and estate planning documents, you should protect them and share copies with important individuals. The original, non-copy version of the will that contains the pen signed signature (sometimes called the wet signature) is the most important. The “original” is the version of the will that is validated during probate. If the original is not being maintained at your attorney’s office, you should consider keeping it in a safe place at home. If you choose to keep it in a fireproof safe, you will want to make sure that your estate executor and / or spouse have the ability to gain access to the safe and are aware of where it is being kept. You will want to provide a copy of the will and estate planning documents to your designated estate executor so that this copy can be verified and to serve as a backup in case the original is destroyed.

Review and update your estate plan annually

The world in constantly changing and the information in your estate planning documents can quickly become outdated. We recommend reviewing your estate planning information each year and making modifications to it when needed. In addition to regular reviews, it’s a good idea to update your plan when significant changes or life events occur. Here are some examples:

  • Marriage, divorce or the passing of a spouse
  • Purchasing a home or other significant asset
  • Paying off a mortgage or significant debt
  • The birth or adoption of a child
  • When a grandchild is born or new potential beneficiary enters your life
  • When a child becomes an adult
  • Death or change in circumstances of the guardian named in your will
  • Borrowing a large amount of money or taking on a significant liability
  • Significant changes in the value of an asset
  • The death or change of your executor, trustee or successor trustee

Keep in mind that the more up-to-date your estate planning documents are kept, the easier it will be for your estate to be administered. We hope that you found our estate planning guide useful. As we have mentioned, we highly recommend that you seek the assistance of an estate planning professional in your area to help you create or review your estate planning documents. We have also included a list of some online resources that you may find helpful in developing your estate plan and an estate planning glossary in case you need clarification on any terms.

Estate Planning Suggestions

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Estate Planning Suggestions

Estate Planning Suggestions

Estate Planning Tips

This Estate Planning tips and suggestions list will help ensure that you consider important topics when creating your estate plan. Estate planning can be complex and it is wise to do some research before you begin speaking with an estate planning professional so that you know what questions to ask about topics that are important to you. An estate plan is a legal document or group of legal documents such as a will, living trust, advance healthcare directive, or spill-over will, that is used to plan for what happens to your estate upon your passing or for your care in case you become incapacitated. These estate planning tips and suggestions will help educate you on what you can accomplish with estate planning and things to consider.

Have a will drafted:

A will can accomplish a variety of things when it comes to estate planning. For instance a will declares those who will inherit your property after your death. Your assets will be dispersed in accordance with your states intestate succession laws if you pass away without a will, which may not be in accordance with your own wishes. A will can allow you to designate a guardian for non-adult children if that is applicable to your situation. With a will you can also donate specified assets to charity(s) of your choosing. Wills are inexpensive to create and can even be created free of charge using websites such as https://www.freewill.com.

Consider Setting up a Revocable Living Trust

A living trust is a legal tool for estate planning that allows a person (known as the Trustee) to hold another person’s (known as the Settlor or the creator of the trust) property for the benefit of someone else (the Beneficiary). It is an estate planning tool that can help family members and beneficiaries avoid a potentially lengthy probate process. A living trust is a legal document which lays out the terms of the trust and the assets that the grantor has assigned to it.

Create a Financial Power of Attorney

Who will make your financial decisions if you are not able to make them for yourself? That is where a Financial Power of Attorney can help out. With a financial power of attorney you can determine that the power of attorney comes into effect when you are incapacitated and ends when you pass away. You designate a trusted agent to work on your behalf and make important financial decisions for you, when you are unable to do so.

Execute an Advance Health Care Directive

Much like a Financial Power of Attorney, you may want to designate a trusted person to make health care decisions for you if you are unable to do so. An Advance Health Care Directive can help you accomplish that. An Advance Health Care Directive, is a Health Care Power of Attorney that describes what medical procedures you do or do not want to receive and designates a health care agent who will make health care choices on your behalf.

Make a Plan for your Funeral and Related Expenses

Your passing is likely to be a very difficult time for your loved ones. The easier you can make the situation for them, the better. It is advised that you communicate your wishes for your funeral and put money aside to pay for it. Doing so can help take some of the stress off of your loved ones as well ensure that your funeral wishes are carried out as you desire.

Review Your Life Insurance and Designate Beneficiaries

Depending on your financial situation and the needs of your family, Life Insurance can be a valuable estate planning utility. Life insurance is one way you can provide financial support for loved ones after you die. When you open a life insurance policy, you will pay a regular insurance premium in exchange for coverage. As long as your policy is active when you die, the insurance company will pay out a death benefit to your life insurance policy beneficiaries. Term, Whole Life and Universal are the three most common life insurance policies types. The following is a brief overview on each of them:

Term Life Insurance:
A term life policy lasts for a specific period of time, typically up to 30 years. During the term, the policyholder makes fixed premium payments in exchange for a guaranteed death benefit. Under a term life policy, coverage ends at the end of the term. Your insurance provider may offer to extend the coverage to another term or convert it to a permanent policy. Typically Term Life Insurance is the least expensive type of life insurance.

Whole Life Insurance:
With Whole Life Insurance, as long as you pay your life insurance premium, the policy will remain active for the entirety of your life. With most whole life insurance policies, the policy premium and death benefit are fixed. Whole life insurance also has a cash value component, which grows over time. You may be able to withdraw from or borrow against the cash value portion of your policy while you are living.

Universal Life Insurance:
Universal life insurance is similar to Whole Life Insurance but potentially offers additional flexibility. Universal life insurance is a type of permanent life insurance. With a universal life policy, the insured person is covered for the duration of their life as long as they pay premiums and fulfill any other requirements of their policy to maintain coverage. Like many permanent life policies, universal life insurance combines a cash value feature with lifelong protection. When you pass away, the policy’s death benefit is paid out to your beneficiaries. Unlike whole life insurance, universal life insurance typically offers more flexibility. You can typically change your death benefits and premiums to accommodate changing circumstances.

You can learn more about Universal Life Insurance here.

With Life Insurance, it is important to update your beneficiaries on any existing policies. Doing so can help ensure the right person will be able to claim benefits when you pass away and avoid conflicts with your estate planning documents.

Create a List of Accounts, Debts and Liabilities

Before you begin your estate planning, it makes sense to get organized and create a list of all of your assets and debts. Make a list of all of your checking, savings, investment, retirement and pension accounts. Also create a list of any money that is owed to you. Additionally you should create a list of all of your liabilities with any debts you owe. Doing so will greatly help with the creation of your estate planning documents and also help the Executor of your estate once you have passed.

Review and Keep your Estate Planning Documents Current

As your life changes, so should your estate planning documents. It is recommended that you review your estate plan annually and or make updates to it as life events occur. Assets such as retirement funds, investment accounts and life insurance policies often have designated beneficiaries and assets with beneficiaries may pass outside of probate, so it is important to keep this information up to date.

Organize Important Documents and Notify Family Members of the Location

A will does you no good if it cannot be located. It is advised that you store your important estate planning documents such as your will, funeral arrangement plans, insurance policy(s), asset and liability information and trust documents a safe and secure location that trusted members of your family are aware of and will have access to if you pass.

What is trust administration?

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What is Trust Administration?

What is Trust Administration?

Trust Administration

What is trust administration? Trust administration is the process of managing and distributing the assets of a trust. When a person creates a revocable living trust and passes, that trust typically becomes irrevocable and enters a phase requiring trust administration so that the assets held in the trust can be distributed to the beneficiaries of the trust. The creator of the living trust, usually referred to as a trustor, settlor or grantor; transfers ownership of their assets to the trust. Typically while the trustor is alive, they also act as the the trustee (the person managing the trust) but designate a successor trustee (the person or people who will administer the trust when they pass or if they become incapacitated) in the trust documents. The successor trustee is responsible for carrying out the terms of the trust and managing the trust assets according to the instructions set forth in the trust document by the trustor. In the process of trust administration, the trustee has a number of duties. Common trust administration duties include:

  • Paying the expenses and debts of the trust
  • Managing the trust assets in a way that is consistent with the terms of the trust
  • Managing any investments held by the trust
  • Maintaining accurate records of all trust transactions
  • Filing any necessary tax returns on behalf of the trust
  • Distributing the trust assets to the beneficiaries according to the terms of the trust
  • Providing accountings to the beneficiaries as required by law or as specified in the language of the trust document

In some cases the administration of a trust can be complicated as well as time-consuming and a professional such as an attorney or trust administration company may be hired to handle or assist with the trust administration. Factors such as the number of beneficiaries, types of assets held in the trust, quantity of assets or the complexity of the trust accounting and taxes may all be considered when deciding if a professional trust administrator should be utilized.

What is a Fiduciary?

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What is a fiduciary?

What is a fiduciary?

A fiduciary is a person (or group of people) entrusted with the responsibility of acting in the best interests of another person or organization. In a fiduciary relationship, the fiduciary has an ethical responsibility to act solely in the interest of the person, client or organization that they represent as opposed to their own interests or the interests of a third party.

Here are some common examples of fiduciaries:

  • An Estate Executor
  • A Trustee or Trust Administrator
  • Healthcare Representative
  • A Guardian
  • A person granted a Power of Attorney
  • A Lawyer
  • Conservator for those who are mentally or physically incapacitated
  • Certain financial advisors
  • Professional Fiduciary

The individual or organization that is named as the successor trustee is a fiduciary acting on behalf of the trust, the assets contained in the trust and in the interest of the beneficiaries of the trust. As a fiduciary, the trustee is obligated to make decisions that are in the best interest of the beneficiaries and abide by the language of the trust.

A fiduciary is often appointed to manage the assets or financial affairs of another person or organization. In these situation a fiduciary has a duty to manage the assets in a way that is in the best interests of the person or organization they are representing. Their actions should be completely free of self-interests. The fiduciary is expected to act with care, diligence, and in good faith. A person designated in an Advance Healthcare Directive to make the healthcare decisions on behalf of another person who has become incapacitated or is unable to make decisions for themselves is also considered a fiduciary. In these cases, the fiduciary has a legal or ethical obligation to act in the best interests of the person they represent.

Professional Fiduciaries practicing in the state of California are required to be licensed by the Professional Fiduciaries Bureau under the California Department of Consumer Affairs. Professional Fiduciaries sometimes have had previous careers working as attorneys, CPA’s, or social workers. The primary association that represents fiduciaries in California is the PROFESSIONAL FIDUCIARY ASSOCIATION OF CALIFORNIA.

According to the Professional Fiduciary Association of California, Professional Fiduciaries can have a wide variety of specialties including:

Accountant/Bookkeeping ⁃ Accountant/CPA ⁃ Appraisal Services ⁃ Arbitrator ⁃
Asset Management Services ⁃ Attorney ⁃ Bankruptcy Administration ⁃ Bill Payment  Services ⁃ Bio Hazard Removal ⁃ Care Management ⁃ Case Management ⁃ Charitable Remainder Trust ⁃ Conservatorship of Estate ⁃ Conservatorship of the Person ⁃ Consultant Services ⁃ Copyrights ⁃ Court Approved Accounting ⁃ Daily Money Manager ⁃ Diversified Personal Services ⁃ Enrolled Agent ⁃ Estate Administration (Probate) ⁃ Expert Witness ⁃ Family Consultant ⁃ Fiduciary Accounting ⁃ Financial Advisor ⁃ Fraud Investigation ⁃ Guardian Ad Litem ⁃ Guardianship ⁃ Hospice ⁃ In Home Care ⁃ In Home Care Placement ⁃ Informal Assistance ⁃ Insurance Trust Administration ⁃ Insurance ⁃ Insurance/Bonding ⁃ Intellectual Property ⁃ Irrevocable Trust Loans ⁃ Limited Conservatorships ⁃ Mental Health Services ⁃ Mortgage Services ⁃ Personal Financial Management ⁃ Physician ⁃ Power of Attorney ⁃ Probate Administrator ⁃ Probate Referee ⁃ Professional Mediator ⁃ Real Estate Finance ⁃ Real Estate Investment ⁃ Realtor ⁃ Receiver ⁃ Representative Payee ⁃ Reverse Mortgage ⁃ Special Needs Trust Administration ⁃ Tax Specialist ⁃ Title/Escrow ⁃ Trust Accounting ⁃ Trust Administration ⁃ Trust Litigation ⁃ VA & SS Payee ⁃ Wealth Management Planning

How much does a fiduciary charge?

Not all people acting as a fiduciary charge fees and the fees that a professional fiduciary charges can vary widely. The fees that a fiduciary charges depends on the specific services they provide, the area they practice, their level of experience and the complexity of the matter they are handling.

Some fiduciaries, such as trustees or guardians, may be appointed by a court / probate court and may not charge a fee for their services. In other cases, a fiduciary may charge a fee for their services which can be based on a fixed rate, an hourly rate, or a percentage of the assets they manage. For example, a financial advisor who serves as a fiduciary for their client may charge a percentage of the assets they manage. This type of payment structure is commonly referred to as an “asset-based fee.” This fee can range from a fraction of a percent to several percent. A lawyer or trust administrator who serves as a fiduciary for a trust or estate will typically charge an hourly rate for their services. Depending on the scope of the work to be conducted, they may also offer a flat fee to completing specific tasks. It is wise to discuss the fees with the fiduciary in advance and to have a clear understanding of the work they will be performing and will not performing.

How do you become a fiduciary?

In general, becoming a fiduciary involves demonstrating trustworthiness, honesty, integrity, and a desire to act in the best interests of others. The following are just a few examples of how you might become a fiduciary:

  • Trustee: You can become a trustee by being named in a living trust document. In these roles, you would be responsible for managing the assets of the trust and distributing them according to the terms of the trust.
  • Executor: You can become the executor of an estate by being named as such in a persons will or last will and testament. In these roles, you would be responsible for managing the assets of the estate or trust and distributing them according to the terms of the document.
  • Financial Advisor: You can become a financial advisor and act as a fiduciary for your clients. The licenses and certifications for becoming a financial advisor include a Series 7 (General Securities Representative Qualification Examination) or Series 65 (Uniform Investment Adviser Law Examination). As a financial advisor, you would be responsible for assisting clients in making financial decisions and managing their assets in a way that is in their best interests.
  • Guardian: You can become a guardian by being appointed by a court to manage the financial affairs or personal care of a minor, incapacitated adult or person with special needs.
  • Attorney: You can become an attorney by completing law school (in some states, such as California, a 4 year degree from a law school is not required) and passing the bar exam in a state. As an attorney, you may serve as a fiduciary in certain contexts.

Regardless of the specific role, becoming a fiduciary often requires a commitment to ongoing professional development and adherence to ethical standards. It is important to note that the specific requirements for becoming a fiduciary can vary depending on the state in which you live and the specific responsibilities of the role. It is a good idea to research the requirements in your area and to seek the guidance of a professional, such as an attorney if you have questions.

What is a Successor Trustee?

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What is a Successor Trustee?

What is a Successor Trustee?

What does Successor Trustee mean?

A successor trustee is a person (or group of people) that takes over the management of a living trust (or a trust of any kind) when the original trustee has died, become incapacitated or is unable to act as the trustee. The successor trustee is typically named by the Grantor / Settlor (the person who created the trust) of the trust in the trust documents. The responsibilities of a successor trustee may also be specified in the language of the trust documents. The Settlor may name several successor trustee(s) in case one or more is unable to act as the trustee. In some cases a professional such as an attorney, fiduciary or trust company is named as the successor trustee.

Is a Successor Trustee and Trust Administrator the same thing?

Yes, typically when someone refers to a person as a Trustee or a Trust Administrator, they are referring to the same person. The trustee or successor trustee acts as the administrator of a trust.

Does a Successor Trustee have to be a relative?

No, a successor trustee does not have to be a relative of the Settlor. Commonly the Settlor chooses a relative such as a spouse, son, daughter, brother or sister to be their Successor Trustee, but it is also not uncommon for them to select an attorney, CPA, or licensed fiduciary.

Does a Successor Trustee get paid for their work?

Yes, in some cases a Successor Trustee or Trust Administrator receives payment for the work they do on behalf of the trust and the trust beneficiaries. Usually this occurs when the Successor Trustee is a professional such as a lawyer, licensed fiduciary or accountant. When the person serving as the Successor Trustee is a family member, it is common for them to decline compensation for the work they do on behalf of the trust. Trust Administration or Trustee compensation varies depending on the qualifications of the person, but annual compensation does not typically exceed 2% of the total trust assets.

What to do when a loved one passes?

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Steps to take when a loved one passes on

Steps to take when a loved one passes on

Regardless of how much advanced notice we may have had, the loss of a loved one is never easy. The responsibility or planning their funeral arrangements or handling the needs of their estate only make the situation more challenging, especially when you don’t know where to begin. So what do you do when a loved one passes away? This EstatePlanningGuide.org article will help you answer that question.

What should I do when a loved one passes away?

The following provides advice on what to do when a loved one dies. This step by step guide will help you with this challenging time and hopefully remove some of the stress.

Steps to take immediately after the passing of a loved one

1 – Obtain a Legal Pronouncement of Death: A legal pronouncement of death is a declaration of the time and date when a person was pronounced dead. The pronouncement of death is typically recorded in the patient’s medical record by the attending provider of health care if one was present. If your loved one passed away at a hospital or nursing home, the staff will handle this. If your relative passed away at home, you will require the assistance of a medical professional to declare their death. You should call 911 and inform them of the situation. They will transport your loved one to the hospital where a legal pronouncement of death can be made and you can request the document at that time. If your loved one passed away at home under hospice care, the hospice nurse can declare them dead and assist you with obtaining the legal pronouncement of death. The official declaration of death or legal pronouncement of death is the first step to obtaining a death certificate. The legal pronouncement of death is important for a variety of tasks involved with the handling of their estate. Without a legal pronouncement of death or death certificate you will not be able to access their bank accounts, filing life insurance claims or beginning their estate and probate process.

2 – Notify family members and close friends: Begin by notifying family members and close friends of the deceased. You may not have contact information for all of them or even know everyone who was important to them. Start with the person who you know that was closest to them. You may want to ask them for their assistance in notifying others, or at least ask them for a list of people who should be notified, along with their relationship to the deceased and their contact information so that you can make the notifications.

3 – Notify their employer and coworkers: If your loved one was employed at the time of their passing you should inform their employer as well as any close friends they worked with. For some our coworkers can be like a second family and they will likely be grieving the loss along with you.

4 – Assist with the needs of any dependents: If the person who passed away had dependents such as children, a person with special needs or an elderly person who is reliant upon them for their survival, make sure their immediate needs are addressed until long term care can be assessed and carried out.

5 – Make sure any pets are cared for: If the person who passed had pets, find them a proper caretakers until permanent arrangements can be made for them. Sometimes people will include requests for the care of their pets in their estate planning documents. The Executor of the decedent’s estate (if it is someone other than you) should be able to assist you with this. A dog or cat can die within just a few does of going without water.

Steps to take a few days after the passing of a loved one

6 – Secure the person home / property: As soon as possible, you should secure the person’s home. Make sure that all doors and windows are locked. Notify any trusted neighbors and ask them to contact you if they notice anything unusual. You should discard and perishable food and remove any trash from the home. You should water plants and tend to any immediate need for the care of the home. You should collect the decedent’s mail and if mail forwarding is needed you should contact the United State Postal Service here.

7 – Contact important organizations: If the person was in the military or had a close connection to a religious organization you should inform them of the passing of your loved one. The Veterans Administration may be able to offers burial benefits or conducts funeral services if requested. You can find out additional information regarding the US Department of Veteran Affairs Burial Benefits here. Additional information on applying for the VA Burial Benefits can be found here on their website. They can also be reached by phone at (800)827-1000.

8 – Employer assistance: If your loved one was employed at the time of their passing you can reach out to the employer to make arrangements for their estate to receive any outstanding compensation that is due and to see if the decedent was eligible for any company sponsored life insurance.

9 – Begin making funeral arrangements: Examine any estate planning documents such as a will or trust that was left by your loved one. In some cases they may have provided information on their funeral wishes or made plans in advance. If none exist, speak with other family members or close friends. Begin making arrangements for funeral, memorial service, cremation or burial. An obituary is a notice of a death, typically including a brief biography of the deceased person and published in a newspaper. You may want to consider writing one for your loved one. If you need assistance on writing an obituary, you can view this article on the NBC News Website located here. You will need to inform people about the service and invite the attendees. You should coordinate tasks like flower arrangements, food and refreshments.

Steps to take a couple of weeks after the passing of a loved one

10 – Obtain the death certificate and make copies: A death certificate is a legal document issued by a medical practitioner which states when a person died. A death certificate may also be issued by a government civil registration office that declares the date, location and cause of a person’s death. Death certificates are important when handling aspects of the decedent’s estate such as probate as well as obtaining government benefits. The death certificate is usually provided by the funeral home. You will want to create multiple copies.

11 – Locate your loved ones estate planning documents: If you have not done so already, you will want to locate your loved ones will or any estate planning documents and notify the declared estate Executor or Trustee of they are declared in the documents and that person differs from yourself. If you are unsure where these documents are located, you may want to search for them in a desk, filing cabinet or lock box. If you are unable to find them, ask family members, close friends or the attorney of your loved one if they are aware of the existence and location of them. If you are unable to locate any, the court will assist you with the handling of the estate during probate.

12 – Speak to an attorney or begin the probate process: If your loved one had a living trust, reach out to a trust and estate or estate planning attorney and review the trust documents for advice on how to proceed. You may be able to avoid the probate process. If there was not a living trust in your loved ones estate planning documents, contact your local county court office about beginning the probate process. Probate is a court administered process that transfers the estate of a deceased individual to named or remaining heirs. An estate is made up of the decedent’s real estate, personal property, life insurance, bank accounts, investments and personal belongings. The court will either approve the designated estate Executor or appoint one at the beginning of the probate process. The Executor will carry out the duties of the estate.

13 – Speak with your loved ones accountant or hire one for assistance if needed: If your loved one had been working with a CPA, you should reach out to them. Inform them of the passing of your loved one and ask for their advice on how to proceed. The estate may have to file a tax return, as well as a tax return on the decedent’s behalf as well.

14 – Complete the probate process if needed: If the probate process is required there are several steps involved that will need to be completed by the executor. Here is what you can expect during a typical probate process:

  • Stage 1 – Filing a petition in probate court and having probate initiated
  • Stage 2 – Issuing notices to heirs and creditors
  • Stage 3 – First probate hearing occurs and the proving of the will
  • Stage 4 – Collection of the decedents assets / estate assets
  • Stage 5 – Paying of creditor claims
  • Stage 6 – The filing of taxes for the estate
  • Stage 7 – Probate court closes the estate and any remaining assets are distributed to the heirs of the estate

Additional information and on the probate process can be found here.

15 – Cancel any services that are no longer needed by your loved one: You should close or cancel and service that are no longer needed by your loved one. Examples of services include health insurance, cellphone service, internet service, newspapers, magazines, streaming services, cable TV service and automobile insurance.

16 – Notify the Social Security Administration of your loved ones passing: If your loved one was receiving Social Security benefits, you must notify the Social Security Administration as soon as possible. You can view information on how to notify Social Security about the passing of a loved one here.  Family members of the decedent may be eligible for death benefits from the Social Security Administration. We suggest asking them for information on benefits when you call them to inform them of the passing of your loved one. The Social Security Administration can be reached at (800)772-1213.

17 – Consider closing your loved ones social media and email accounts: You can choose to have your loved ones social media accounts removed or left up as a memorial to them. If you choose to have the accounts removed, you will likely need to provide them with a copy of your loved ones death certificate. Many of the larger social media companies such as Facebook and Instagram will also allow a deceased person’s profile to remain online, marked as a memorial account. You can click here if you are interested in removing a loved ones profile from Facebook.

We hope that this checklist on what to do when a loved one passes is helpful. If we can provide you with any other information, please leave us a comment or contact us here.

Trust Loans and Avoiding Property Tax Reassessment

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Loans to Irrevocable Trusts

Trust Loans and Loans to Irrevocable Trusts in California

Property Taxes in California and Proposition 13

Each state in the US has their own individual laws, rules and regulations that govern estate planning, inheritance and taxation. California for instance has several property tax laws that control how much a persons property tax can increase each year and how you can avoid property tax reassessment on an inherited home.

The primary legislation that stabilizes property taxes in California is know as Proposition 13. Proposition 13 provides three functions in property tax assessment.

  • All real estate has an established base year value
  • A homes assessment can not increase by more than 2% a year
  • A homes property tax base can not exceed 1% of the assessed value (plus additional voter-approved taxes)

Additional information on California Proposition 13 can be found on the Santa Clara Assessors Office website located here.

California Proposition 19 and the Exclusion from Reassessment on an Inherited Home

California Proposition 19 went into effect on April 1st, 2021 and replaced the existing legislation that controlled how a person inheriting a home from a parent could avoid property tax reassessment. The previous legislation was known as Proposition 58. With Proposition 19, a few of the rules for obtaining an exclusion from reassessment on an inherited home changed. Previously under California Prop 58, a child inheriting a home from a parent could apply for an exclusion from property tax reassessment with no value limitation, providing that the home they were inheriting was the parents primary residence. Under Proposition 58 you could also transfer the property tax base from a parent to child on an investment property or second home with a 1 million dollar property tax exclusion limit (per parent). Under Proposition 19, there is now a limit of the current taxable value plus $1,000,000 on a home you will use as your primary residence. Prop 19 also eliminated the ability to avoid reassessment on an inherited home that will not be used as your primary residence. You can view addition information on California Proposition 19, on the California Board of Equalization website located here.

In addition to the Proposition 19 and Proposition 58 property tax transfer rules listed above, there are additional requirements when it comes to receiving an exclusion from reassessment on an inherited home in California. For instance, the California Board of Equalization requires that all trust beneficiaries receive an equal share of assets, if language requiring an equal distribution exists in the trust, which it often does. If an equal distribution is required, a loan cannot be made to the trust by any of the beneficiaries who intend on keeping the home. Doing so would be considered a sibling to sibling buyout by the Board of Equalization and result in a disqualification from a full exclusion from reassessment. They view this as a transfer between beneficiaries rather than a transfer from parent to child.

The following is a simplified example of how an equal distribution of trust assets works when a trust loan is involved. Lets assume the only asset in the trust is a home worth $300,000. One of three child beneficiaries wants to keep the home, and the other two would like to receive cash. A loan would need to be made to the trust for $200,000. In this situation the two beneficiaries who did not want the home would each receive their $100,000 as cash and the other child receives the home with $100,000 equity in it. Since each child received a distribution of $100,000 in trust assets, an equal distribution was made. Detailed information on the California Board of Equalizations requirements for equal distributions and other parent to transfer requirements can be found here on the BOE Website.

Trust Loans and Lending to an Irrevocable Trust

Trust Loans and Loans to Irrevocable Trusts

Trust Loans and Loans to Irrevocable Trusts

A trust loan in a loan to an irrevocable trust that provides enough so that an equal distribution of assets can be made to all beneficiaries. When an irrevocable trust contains insufficient cash assets for an equal distribution to be made, a person will often require the assistance of a specialized lender known as a Trust & Estate Lender. Trust and Estate lenders specialize in making loans to irrevocable trusts and estates that are involved in probate. As documented by the California Board of Equalization, the acquiring beneficiary may not utilize their own funds or make a personal guarantee on the loan. Doing so would create a sibling to sibling buyout, disqualifying them for the full parent to child transfer exclusion. The loan will need to be made directly to the trust (which is usually an irrevocable trust), without first removing the property from the trust or requiring a personal guarantee from the acquiring beneficiary. A conventional lender will almost never lend to an irrevocable trust, and will instead first require that the home is removed from the trust before they will lend to it. Conventional lenders also typically require a personal guarantee from the person taking the loan. An experienced Trust and Estate lender will make a loan directly to the trust, providing enough cash for the equalized distribution to be made with no personal guarantee from the acquiring beneficiary.

A Trust & Estate Lender often works directly with your attorney. A trust loan is typically a short term loan with a term of 6-24 months and does not typically carry a pre-payment penalty. Trust loans usually have higher interest rates than conventional mortgages. Once the inherited home has been transferred from the trust to beneficiary, the loan can be paid off or refinanced into a conventional mortgage. You will want to review all aspects of the transfer with a qualified Trust & Estate Attorney to verify you are doing so in accordance with the California Board of Equalization requirements and that you will be eligible to receive a full exclusion from property tax reassessment on your inherited home. You can learn more about trusts, living trusts and irrevocable trusts here.

Proposition 19 Benefit Calculator for Inherited Properties

You can also use our online Proposition 19 Benefit Calculator to estimate how much you might be able to save by taking advantage of a Proposition 19 Parent-Child Transfer. You can access the Prop 19 Benefit Calculator here.

Free Estate Planning Guide

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Free Estate Planning Guide

Free Estate Planning Guide

Free Estate Planning Guide Now Available Online

EstatePlanningGuide.org is pleased to announce that we have launched our free, downloadable and printable estate planning guide. This new estate planning guide will help educate you on some of the different estate planning options available to you. The complimentary guide on estate planning helps explain a variety of estate planning topics in a simple and easy to understand manner. This free estate planning guide is now available for download here.

What does the estate planning guide cover?

The estate planning guide covers topics such as wills, living trusts, probate, advance healthcare directives and power of attorney documents. The guide delves into what a will can accomplish and in what situation a living trust may be a better option for you. It provides you with a 10-part step by step guide on how to prepare your own estate plan. The estate planning guide also includes a comprehensive estate planning glossary to help ensure that your understand of all of the information included in the estate planning guide.

Who is the estate planning guide intended for?

If you are or have been considering creating a will, trust or estate plan, this is the guide for you. It begins by explaining what estate planning is and what can be accomplished with it. The guide also covers issues like probate, how long it can take and how it can potentially be avoided. The free estate planning guide even provides you with information on creating an inventory of your assets in preparation for drafting a will or creating a living trust. The estate planning guide also includes a section on how to find an experienced and capable estate planning professional in your area to assist you with your estate planning needs.

If you are ready to being you estate planning process, please visit the estate planning how to guide on our website located here. It is a condensed version of our free estate planning guide and will help you get started with your estate planning.

Free Online Inheritance Calculator

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Online Inheritance Calculator

Online Inheritance Calculator

EsatePlanningGuide.org has created a free to use, online Inheritance Calculator / Probate Calculator. The online calculator is designed to help trustees, executors, administrators, beneficiaries and heirs determine the approximate dollar amount of the inheritance of an estate. The inheritance calculator is very simple to use. The calculator breaks down the most common estate assets listed in a will or in probate as well as the typical estate liabilities. To use the inheritance calculator, you simply add any applicable amounts to the asset and liability sections of the calculator. If the estate does not contain the specified asset or liability, just leave it blank. Once you have completed that section of the inheritance / probate calculator, the inheritance calculator will estimate the total value of the estate minus any estate liabilities.

Next the inheritance calculator allows you to specify how many beneficiaries / heirs there are included in the estate. After that has been entered, the estimation of the inheritance per beneficiary is calculated for you. The inheritance calculator also allows you to print the results so that you many share them with the other members of the estate or have them reviewed by the estate lawyer. The following is a screenshot of the inheritance calculator. You may click on the image or the link to try the inheritance calculator for yourself.

Inheritance Calculator

Inheritance Calculator

Click Here for the free online inheritance calculator.

If you would like additional information on estate planning, wills, trusts and probate; please visit the Estate Planning section of our website. For additional online estate planning tools, we also have an Estate Planning Tools section to assist you with that.