Frequently Asked Questions
If you die without an Estate Plan and you have Real Property in your name and/or the gross value of your assets exceeds $166,250.00, you are required to file a Petition to Probate your Estate. The Probate will require the assistance of an attorney, take approximately 18 months to complete, and will require the payment of attorney’s fees and fees for the Personal Representative of the Estate. For a $500,000.00 gross value estate, attorney’s fees and fees for the Personal Representative will total $26,000.00 ($13,000.00 x 2).
A Trust is a recognized legal entity that requires a Trustor, Trustee, Beneficiary(ies), a legal purpose, and property with title vested in the name of the Trust (“Trust Corpus”). The Trust is designed to hold property for the benefit of the beneficiaries. The Trust only has power to act regarding property where title is vested in the name of the Trust. The Trust becomes effective upon the receipt of title to property vested in the name of the Trust. In Estate Planning, a Trust is used to hold title to real and personal property to avoid the mandatory filing of a Petition for Probate in the Superior Court where the decedent resided prior to death.
A Last Will & Testament (“Will”) is a document that becomes effective only upon the death of the decedent. The Will’s purpose is to provide evidence of the decedent’s intent to distribute property and to provide last directions regarding the handling of the decedent’s affairs. The formation of a Will does not prevent a mandatory petition for Probate if the decedent has Real Property in his/her name and/or has a gross estate value of more than the Probate Limit.
In essence, a Trust can prevent the required filing of a Probate Petition and a Will can’t.
You can discuss any of your legal affairs with your family or friends. However, Estate Planning is confidential and you are not required to discuss any of the details of your estate plan with anyone. The short answer is “NO”.
In our experience, it is very unlikely that a person named as a Trustee (or as Executor or Attorney-In-Fact) will decline to serve. When the times comes to serve in a capacity as appointed by the Trustor, the appointed person is usually agrees to serve. However, that is why we appoint at least two successor Trustees to serve.
Why do I need an Estate Plan? In our view, if you hold title to any Real Property you should have a estate plan that includes a Simple Living Trust. The use of the Simple Living Trust to hold title to Real Property will avoid the required filing of a Probate Petition. Other reasons for the Estate Plan, include clearly articulating your wishes on handling of your affairs, providing for someone to handle your financial affairs if you are incapacitated (GDPA), providing for someone to handle your healthcare decisions in incapacitated (DPAHC), and provide your Attorney-In-Fact with an Advanced Directive regarding the termination of life sustaining measures.
Durable Powers of Attorney allows a third party to act and make decisions on your behalf. “Durable” indicates that the Power of Attorney has to be terminated by the Principal’s affirmative written action or by the Principal’s death. The General Durable Power of Attorney allows for a third party to make financial decisions on behalf of the principal. The Durable Power of Attorney allows a third party to make healthcare decisions on behalf of the principal.
Durable Powers of Attorney allow a third party to make decisions on your behalf if you are incapacitated or in your absence (GDPA). The DPAs make sure that someone can act on your behalf if you can’t.
You can transfer title of Real Property to your children during your life, but it comes with the following bad consequences:
- You lose the ability to use the equity in the property (home) for your care, assistance, or comfort. If you transfer title to your children, you may not be able to get the property back in the event you need to use the equity in your home, and
- You will lose the stepped-up tax basis. If you make a transfer of property to your children during your life, they will assume your tax basis in the property. This could result in significant capital gain taxes in the future when the property is sold.