925-283-2500 derek@wagleylaw.com

Estate Planning

Wills, Trusts and other testamentary documents are not just for the wealthy. Regardless of how much or how little money you have, these documents assure that whatever personal belongings or assets you have will go to the beneficiaries of your choice.  Without these documents, the court makes the decisions and the laws of the court will be applied irrespective of your actual testmentary desires.   While most people do not want to think about their own mortality, making preparations ahead of time to protect one’s family and friends is of great importance and allows most to feel piece of mind, knowing their testamentary wishes will be carried out and their family and friends will be protected in their absence.

What happens if you die without a will or with only a Will?

Generally speaking, all real and personal property in which you have an interest will be subject to probate laws of the state of California, which can be very expensive and quite time consuming to your estate before it is distributed to your beneficiaries or heirs at law.

If you die without a Will, all of your property passes through probate and is distributed to your heirs pursuant to the laws of intestate succession.  What that means is that in an expensive and time consuming probate procedure, certain heirs will inherit your property no matter what your personal feelings might be towards said individual.  Without a Will,  you will not be able to choose who that beneficiary will be.

If you die with a basic Will, all of your property will need to be probated.  Is a will better than not having a will at all?  The answer is “yes”, but it is not the best solution for most people. The advantage to having a Will, even though it requires going though probate, is the following:

  1. You can choose who is to receive your property after probate is concluded.  Thus, you can give your property to certain family members to the exclusion of other family members.  You can include friends or charities to be your beneficiaries.  This would never happen if you died without a will.
  2. If you have a child or children, you can choose who would be your choice, your family member or close friend, to raise your children if you and your spouse or former spouse do not survive.  In the view of many, this is one of the more important provisions of any Will.
  3. In a Will, you can choose who would handle the duties of an executor of your estate.  Without a Will or a provision in your Will on this issue, the court could appoint some member of your family that you may not have ever chosen.
  4. There are a number of other reasons which are also important for having a Will compared to no Will at all that would be discussed at our initial consultation.

Can an estate Avoid Probate?

The answer is yes.  Most individuals, whether married or single, in my opinion, should have a revocable intervivos trust with a pour over Will.   All assets which are part of this type of trust will avoid probate and pass directly to your named beneficiaries.  These trusts  are revocable and subject to modification while the trustor (one creating the trust) is living.  The revocable intervivos trust can having provisions for a simple, moderate, or more complicated estate depending on the facts.  If the size of estate is large enough it can also save on “estate taxes”.  The cost of creating said trust depends on the complexity and size of the estate at issue.  After an initial interview, you will receive an estimate of costs to create said estate plan.  In almost all cases, the creation of a revocable living trust will save you thousands of dollars plus many more advantages by avoiding probate costs.

Is a living trust still advisable if the value of my estate (net value) is on the low side?

In most cases, it is still the advisable way to go.  Take the following scenario as an example: You own a house with a $200,000 market value with a mortgage of $160,000 and have equity of $40,000. If you die without a will and are single, it must go through probate.  Probate fees (see table below) are calculated on the gross value of said estate, not the net value.  The attorney and the executor are paid the same fee.  Under the above example, probate fees could be as high as $14,000 plus.  The creation of a revocable living trust could cost a small fraction of that amount and be concluded much quicker than going through a full probate procedure.  Another example is a husband and wife owning the same size estate as given in the above example.  If they hold title to their house in joint tenancy form with right of survivorship, but are both killed in a common accident, their property needs to be probated.  If they have a child as a surviving beneficiary, said child will receive the inheritance after the deduction of high probate expenses when said child reaches age of marjority which is 18 years.  If the estate was in a revocable living trust, the parents could have provisions in the trust to cover all educational expenses for said child, all non covered medical expenses incurred for said child and then the parents could select the age for the child to receive said inheritance beyond the age of majority.  This could be one age, such as age 25 or 30 or could be at different ages such as ½ at age 25 and balance at age 30.  This allows more time for maturing while at the same time paying for reasonable expenses for education and non-covered medical expenses, a very important provision in any trust and this is not available in a basic will.

The table below will show you an example of probate fees in the state of California.

Estate Value Statutory Fee
$100,000 $4000
$200,000 $7000
$300.000 $9000
$400,000 $11,000
$500,000 $13,000
$600,000 $15,000
$700,000 $17,000
$800,000 $19,000
$900,000 $21,000
$1,000,000 $23,000
$1,500,000 $28,000
$2,000,000 $33,000
$3,000,000 $43,000
$4,000,000 $53,000
$5,000,000 $63,000
$6,000,000 $73,000
$7,000,000 $83,000
$8,000,000 $93,000
$9,000,000 $103,000
$10,000,000 $113,000
$15,000,000 $138,000
$20,000,000 $163,000

Quick Note: Just as bad as having no Will is having an outdated Will.  If you have been married, re-married, there has been a death, birth or a divorce in the family since your last Will was made, it may be a good idea to have an attorney analyze your previous testamentary documents to see if revisions are in order. 

Other Estate Planning Instruments:

Having a valid Will and trust in place is just part of the puzzle.  Along with a Will and trust, I recommend also having a health care directive and a financial power of attorney.

Advanced Health Care Directives

Under state law, you have a legal right to express your health care wishes and to have them considered in situations when you are unable to make these decisions yourself. An advanced health care directive lets your family and/or friends know in advanced what your health care desire are in the event you become incapacitated and unable to make said decisions on your own.  Down the line, this will alleviate any guess work by your family during a time of stress and sadness.

Durable Power of Attorney

A durable power of attorney is a simple and inexpensive way to allow someone other than yourself to manage your finances should you become incapable of doing so.  Should the worst happen and you do not have this document as part of your overall testamentary plan, your relatives or friends will more than likely have to go to court to have a judge decide who should be responsible for your affairs.

Financial Power of Attorney

A financial power of attorney is a simple and inexpensive way to allow someone other than yourself to manage your finances should you become incapable of doing so.  Should you become incapacitated and you do not have this document as part of your overall testamentary plan, your relatives or friends will more than likely have to go to court to have a judge decide who should be responsible for your affairs.

If you are married and live in California, both spouses must join together in the sale of co-owned real estate.  If one spouse were to become incapacitated due to injury or illness, it would cause additional hardship if property needed to be sold but readily could not be.

The Law Office of Derek M. Wagley will carefully listen to your goals and strategically draft a testmentary instrument to carry out your wishes.