Divorce remains one of the most stressful life events any person can go through. Making decisions when experiencing such emotional turmoil can be extremely difficult. So many individuals end up making costly mistakes when attempting to navigate the process of divorce without adequate legal representation and guidance.
Normal parents love their children more than life itself. Typical parents make sacrifices so their children can have a better life than they themselves have or had. Unfortunately, it’s easy to lose perspective about what’s best for children in a divorce. Emotions and tensions run high and are very challenging to control.
Infidelity is one of several factors that can lead to divorce. According to a recent study by the American Psychological Association, marital infidelity is cited to be responsible for about 20-40% of divorce cases in the United States.
Estate planning documents allow you to express your wishes regarding the handling of your estate. You can name your beneficiaries and specify what you want to leave each of them when you are gone. Those documents can also provide a way to formally express what you want to happen to your remains which may be the most personal wish you make.
When a person dies in California, the probate court will determine if there’s a will expressing the decedent’s wishes on their estate is to be distributed to the named beneficiaries. If there is a will, it will generally name an executor (or personal representative) to oversee the probate process.
As we grow older, we start thinking about the legacy we will leave behind. Estate planning is not only the first step in establishing that legacy — it’s a crucial one.
How detailed do your plans need to be for the future? That can depend on a lot of factors, but preparation for the future and the unforeseen — commonly called “estate planning” — must be done not only for the sake of your loved ones but for yourself as well.
People often read or are told by their friends to get a living trust to make sure their estate does not have to go through probate. I am frequently asked if this advice is correct.
For most, the simple answer is, “Yes.”
However, before tackling the question, we need to understand some basics.
First, understand what “probate” is. In short, a probate is a court supervised process by which a person’s estate is administered. Keep in mind that under California law a last will and testament does not avoid the legal requirement of a probate, although a will does determine how your assets are distributed (after debts, final expenses, and administrative expenses are paid). In addition, if you have minor children a will is necessary for you to name guardians if you should pass away before they are adults.
Second, understand that probate takes time. Like everything legal, when a court is involved, there are filings, deadlines, waiting periods, responses, hearings, and maybe a trial. Probate is no different. In a very simple uncontested probate case, the time to process the case through the court could easily take a minimum of six to eight months. More often than not, however, cases have some complexity that requires some unusual consideration or resolution, or there additional time is necessary to gather required information, perhaps liquidate certain assets, or get calendared in a very congested court docket. More typically, cases take much longer.
Third, understand that probate cases are a public record. Although specific information is redacted in order to protect and keep confidential certain information, such as tax identification numbers and account numbers, the substance of the information in the court file is open for anyone to see.
Fourth, understand that the court has control over the process. The court may grant a greater degree of powers for an appointed administrator to take certain actions, but not all actions can be concluded without approval. For example, the court may grant the administrator powers to liquidate certain assets in anticipation of a distribution to estate beneficiaries, such as stocks, mutual funds or other securities, but not the liquidation of real estate, without court approval, even if directed within a will.
Fifth, understand that probate is expensive. The Probate Code sets standard legal fees and administrator’s fees totaling eight percent of the first $100,000, six percent of the next $100,000, and two percent up to the next $800,000. The fees are based on the gross value of the estate, not deducting any debts or mortgages. So, if your estate includes a home valued at $400,000, a couple of vehicles valued at $30,000, bank accounts valued at $20,000, and personal property (i.e. furniture, appliances, etc.) valued at $10,000, the total value of the estate regardless of debts is $460,000. Thus, the fees for probate would total $24,400 ($100,000 x .08 + $100,000 x .06 + $260,000 x .04). In addition, the court charges filing fees at the inception of the case and each time a motion is filed with the court for the court to approve some action by the administrator. The court will appoint a person called a probate referee to appraise property, and at least one notice will need to be published in a newspaper of general circulation. It would be advisable to add an addtional $2,000 - $3,000 in costs to the probate.
Sixth, understand that a will does not avoid probate. Under current California law, if the gross value of the estate is more than $166,250, it must be probated. Again, keep in mind this figure represents the total value of assets NOT deducting debts. So, it does not represent the actual equity in the estate. Also, in most cases, this sum does NOT include retirement accounts, life insurance, or other property passing by way of a title right (to be discussed in a separate post).
Proper planning to include a revocable living trust (among other relevant documents) can avoid the formality of probate, can avoid the court’s involvement, and can substantially reduce the time and expenses of administration.
If you have specific questions, feel free to take advantage of a free consultation by filling out our contact form or calling us.