Frequently Asked Questions About Estate Planning In The West Valley & Beverly Hills

A trust is basically an agreement where a single person or a married couple (the grantor or creator) give their assets to another person who acts as the trustee (manager) and the trustee holds it for the benefit of the third person who is the beneficiary. The grantor(s) act in three capacities: grantor, trustee and beneficiary, while alive. The trustee will manage the trust assets just as they always have.

So a trust is a legal way to hold assets. It sets out who the beneficiaries are during the lives of the grantors and who the beneficiaries are after the grantors pass; who the trustees are; and how the trust will be administered. As far as benefits, a revocable living trust saves your family time and money by avoiding probate -- the court controlled process which is expensive and time-consuming. A trust confers several other benefits as well. Unlike a will, a trust has provisions for a successor trustee when a trustee becomes incapacitated and is no longer able to manage the trust assets.  So that avoids the necessity for a possible conservatorship where you have to go to court and have someone appointed to act for the incapacitated person. That is a very expensive and lengthy process. Good estate planning avoids that. Another benefit is that a trust is harder to contest than a will.  So if there is a dissatisfied family member who wants to get in a fight and contest it, the trust makes it more difficult.

There are different types of trusts that serve specific purposes based on a family's situation. We start with the revocable living trust - the foundation of any estate plan. First, it avoids probate if properly funded and second, it provides protection should the trustee become incapacitated.

What if there is a child (whether it be a minor or adult child) that has a disability (a “special needs” person)? If a special needs person were to receive an inheritance, it may render them ineligible for valuable government benefits such as Medi-Cal. The solution is for the parents to create a Special Needs Trust that protects disabled beneficiaries or even a surviving spouse.  The disability may be schizophrenia, cerebral palsy, severe autism, or Alzheimer’s. They may be unable to work.

Remember, Medi-Cal is a needs based program. If a special needs person inherits a great deal of money, he or she will not qualify for Medi-Cal or SSI or worse yet, may be disqualified from receiving benefits they had been receiving. As a result, his or her inheritance will be spent down quickly if they need ongoing healthcare. If the inheritance had gone into a special needs trust the asset would not be considered their asset for purposes of qualifying for government benefits.  A fiduciary acts as the trustee who hopefully understands these benefit programs and is permitted to use assets to supplement or enhance a special needs person life. For example, a trustee may purchase a home for the special needs person.  Or if he or she lives in a group home, the trustee may pay for a single room.

Next we have the spendthrift trust. It’s similar to a special needs trust. This is for beneficiaries who don’t manage money very well and/or have a drug and alcohol problem. A spendthrift trust protects the beneficiary from their own reckless behavior and preserves assets. The parents can specify the scheduling of distributions, the amount and under what conditions the trustee may make distributions. There may be provisions where the trustee may require a blood test before authorizing a distribution if they suspect alcohol or drug abuse. Then the trustee can require rehabilitation before any further distributions can be made.

The “IRA Inheritance Trust” – is what we call a living trust for retirement accounts. Understand that typically we don’t want a living trust to own retirement accounts (e.g. IRA’s, 401(k)’s, etc.) unless there is a beneficiary who is a minor. Otherwise, the tax deferral advantages will be lost. But again, what if you have an adult child who doesn’t manage money well? We offer the IRA Inheritance Trust as a solution. This trust was specifically approved by the IRS. This trust not only protects the adult child’s share from mismanagement – it also protects the “stretch out” of each beneficiary’s share over their lifetime (although current legislation known as the SECURE Act may radically change the “stretch out rules”. Beneficiaries (even responsible ones) often make the mistake of cashing out their share of the retirement account proceeds, not realizing that a tax will be due as a result. Furthermore, there may be a loss of hundreds of thousands of dollars that could have accrued over their lifetime had they kept the rollover IRA intact.   

Then there is the Personal Asset Trust. This is an asset protection trust for beneficiaries. This trust provides protection against creditors, judgments, and the biggest threat of all – divorcing spouses. What if your adult child is in a high-risk occupation, such as a physician or is an owner of rental properties? A personal asset trust is the smart choice.

The Medi-Cal Asset Protection Trust is a very sophisticated trust and is an invaluable tool that we use in Medi-Cal planning.

We have the Bridge Trust for those who want asset protection for themselves. This is a very unique, sophisticated asset protection trust.

As you can see, there are many different types of trusts that serve different purposes. Every family's needs are different. We design estate plans that serve the unique needs of our clients.

A revocable living trust does not protect assets from creditors. That is a big misunderstanding that many people have. It avoids probate but it does not provide asset protection.  

We do offer, however the Bridge Trust for those who want asset protection for themselves. This is a very unique, sophisticated asset protection trust.  The Bridge Trust® combines the strengths of an offshore trust with the simplicity of a domestic asset protection trust (“DAPT”).

The Bridge Trust is an Asset Protection Trust registered offshore but domesticated (Domestic Asset Protection Trust) for tax and administrative purposes. This means that there are no complicated foreign filing requirements or IRS forms.

If a legal crisis occurs, the Trust and accompanying assets “cross the bridge” to the offshore jurisdiction, beyond U.S. court authority – for ultimate peace of mind.

Then there is the Personal Asset Trust. This is an asset protection trust for beneficiaries. This provides protection against creditors, judgments, and the biggest threat of all – divorcing spouses. What if your adult child is in a high risk occupation, such as a physician or is an owner of rental properties? A personal asset trust is the smart choice.

Estate planning is not just about what happens to your assets after you pass away. Effective estate planning looks at all of the issues, from death and disability to planning how to pay for long-term care. The objectives of an estate plan are:

• I want to control my property while I’m alive and well.
• I want to plan for my loved ones and myself if I become disabled.
• When I die, I want to give what I want to whom I want, when I want, the way that I want.
• I’d like to do all of that knowing what it’s going to cost me.

That is what we can do for you. This is what we do for every family we serve.

Actually, there is no typical estate plan. Every family presents unique issues to deal with. That said, we offer what we call the Foundational Estate Plan. This includes:

• Revocable Living Trust
• Pourover Will
• Durable Power of Attorney
• Advance Health Care Directive and HIPAA Release
• Property Agreement
• Trust Certification

See estate planning for further information about each document.

Yes. What if your beneficiary does not manage money well or can be taken advantage of easily? Or if your beneficiary is a physician or other line of work that is vulnerable to lawsuits? We offer the Personal Asset Trust as a solution. It provides permanent asset protection for your loved one’s inheritance making those assets safe from the reach of creditors, judgements, and divorcing spouses. Someone you trust can be the trustee (manager) of your loved one’s trust if they don’t manage money well. See personal asset for further information.

What if a large part of your wealth is held in retirement accounts, such as an IRA? Upon your death it will “roll-over” to your designated beneficiaries. Your beneficiary can also enjoy tax-deferred, interest compounding throughout their lifetime unless they cash it out. That will result in the loss of perhaps hundreds of thousands of dollars and taxes will be due. We offer the IRA Inheritance Trust as a solution. That is, to prevent a cash-out by a beneficiary. This trust was approved by the IRS to hold retirement accounts. No other trust can own retirement accounts without giving up the tax deferred benefit. It also offers asset protection and the ability to name a trustee to manage it for a spendthrift beneficiary. See ira inheritance trust for further information.

What if a beneficiary has a disability and is dependent on government benefits such as SSI and Medi-Cal? If they were to receive an inheritance, it would render them ineligible. The solution is our Special Needs Trust. See special needs trust for further information.

Estate planning is not free, but it is affordable, and the benefits far outweigh the costs when you consider what could happen if you do not have an estate plan in place.

The Benefits of Estate Planning

An estate planning attorney can help you create an estate plan that:

• Minimizes the estate taxes that will be paid after your death. An attorney can structure your estate plan to minimize any taxes that your estate might have to pay.
• Ensures that your money goes where you want it to go. Whether there is a charity or specific beneficiaries that you want to leave your assets to, an estate planning lawyer can create an estate plan to ensure that your money goes where you want it to go.
• Safeguards your children. In addition to protecting your children financially, an estate plan will allow you to name a guardian for your minor children so that you decide who will raise them if you can’t do it.
• Minimizes fighting among your children or other heirs. Your estate plan creates certainty and can eliminate any dispute over who gets what or what should be done with your assets.
• Protects your family right after your death. Your estate plan can include funeral plans and funds for your funeral, so that your family does not have to make these decisions in their first few days of grieving.

There may also be other benefits to a well-designed estate planning.

The Costs of Failing to Create an Estate Plan Can Be High

If you fail to create and implement an estate plan, then the potential costs include probate expenses, guardianship or conservatorship proceedings, taxes, and other financial implications which can easily exceed the cost of creating an estate plan.

How Much Will Your Estate Plan Cost?

Every estate plan is unique. Your specific cost will depend on the attorney that you hire and the complexity of your estate. However, there should be no surprises. The Estate Planning Law Center charges a flat fee—not an hourly rate—so that you know your total cost up front.

To learn more about the benefits and costs of estate planning, please schedule a free, no-obligation consultation with an experienced lawyer to discuss your estate planning goals and the potential fees. Then, you can decide for yourself if the benefits of estate planning outweigh the expenses.

There is a lot to consider when you are ready to hire an estate planning lawyer. The attorney you once hired for your car accident case or to set up your business, may not be the right one to protect your family now.

Things to Think About When Hiring an Estate Planning Lawyer

As you make this important decision, it is important to consider:

• Attorney reviews. You can find reviews of estate planning lawyers on many online rating websites. You can, for example, search an attorney’s name on Yelp or look at testimonials on attorney websites to get opinions from people who have already worked with the lawyer you are considering.
• Attorney experience. Be selective in choosing the attorney who drafts your estate plan. Look for an attorney with the sole specialty of estate planning. Estate planning is a unique area of law, and you want someone who has the experience and education to achieve the results that you desire.
• Cost. The cost of estate planning will vary substantially from attorney to attorney. It is very important that the quote be complete and include consultations, ancillary documents, and help in getting assets transferred into applicable trusts, for example. Documents are worthless if they don’t fit your needs.
• Your feeling when you meet with the lawyer. Paying for an estate plan without personally meeting with the attorney is like having surgery without the doctor in the room. You want to know that you can trust the person that you hire to do such an important job for you. A free, initial consultation is your opportunity to ask questions and get answers. Your initial impressions and gut feelings matter.

You are hiring an attorney to do an important job, and you have the right to be selective. We want you to make the decision that is right for you and your family. Accordingly, we encourage you to schedule a free, no-obligation consultation with us so that we can sit down and get to know each other before you decide which estate planning lawyer to hire. Please contact us through this website or by phone to schedule your appointment today.

As with any type of trust, a special needs trust is created when someone identifies property to be managed by someone else for the benefit of named beneficiaries. In the case of a special needs trust, the beneficiary usually has a disability that makes the beneficiary unable to manage his or her own money independently.

If you would like to provide financial assistance to someone with special needs, then a trust may be a useful legal tool for achieving your goal.

Benefits of a Special Needs Trust

While each situation is unique, the following are some potential benefits of a special needs trust:

• A special needs trust may allow the beneficiary to continue benefiting from government assistance programs. If the beneficiary qualifies for Medi-Cal, Supplemental Security Income (SSI), or other government benefits that are based on income, then the beneficiary may still continue to qualify for those benefits even if a special needs trust is established. It is the trustee, not the beneficiary, who has control over the trust assets. Therefore, the assets will not be considered for government assistance program eligibility. However, if you were to make a gift outright or leave a direct bequest in your will, then the beneficiary would own the property outright, and the recipient might be ruled ineligible for government assistance programs.
• Someone else is in charge of the money. The trustee will make decisions about how the assets of the trust are invested and dispersed to the beneficiary.
• You can decide how and when the beneficiary benefits from the trust. The terms of the trust, for example, could require that the trust money be used for necessities, for recreation, for medical care, or for a combination of things.

It can be scary to think about what will happen to your loved one with special needs after you are gone. It is essential to be prepared, to think about all possible contingencies, and to continue to help your loved one for a long time to come.

As with any type of trust, it is important to talk to an experienced estate planning lawyer before deciding whether or not to set up a special needs trust. Please contact us today via this website or by phone to schedule a free, confidential, no-obligation consultation about your unique needs.