What shouldn’t I put in my Living Trust?

 

Automobiles

I don’t recommend putting your automobile into a Revocable Living Trust mainly because if you should get into an accident, and the other person sees that your car is owned by a Trust, they may think you are wealthy and look to sue in a situation where they otherwise would not.

Now, if you own a classic car, hot rod, or other collectable car that you plan on keeping for a long period, then it makes more sense to put the auto into the Trust.  Usually these types of cars are not “daily drivers” and pose less of a risk of lawsuit like discussed above. 

  

IRA’s and 401(k)

IRA and 401(k) accounts present a specific problem if we try to put them into a Living Trust by changing the title of the asset.  The problem is that doing so creates a “taxable event” and too much of the value of the IRA will be lost to taxes.  Not good.  So what do we do with IRA’s?  The question depends on your situation.  If you are married, likely the best solution is to name the spouse as the beneficiary (and not a Trust).  If you are not married, then a beneficiary designation can still be utilized to pass the asset on to someone else such as a child.  Another method is to name a specially designed Trust called a Standalone Retirement Trust (or SRT) as the beneficiary.  Using a Standalone Retirement Trust provides some benefits to the beneficiary that an outright gift cannot.  Naming an individual as the beneficiary (and not a Trust) is considered an “outright gift” because once they are entitled to the funds, there is no control over how the funds are to be used (provided they are over 18 years of age).  They get the lump sum and off they go.  You can see how this can be a bad situation for the young, those bad with money, those subject to predators, or even those bad marriages!  In a recent case called Clark v. Rameker, the Supreme Court held that an inherited IRA cannot be shielded from creditors or bankruptcy.  This is why a Standalone Retirement Trust can be so beneficial.  There are other tax advantages to using a SRT that I won’t go into here, but in a nutshell, the distribution may be able to be streached out and keep the beneficiary in a lower tax bracket, and provide opportunity for the IRA to continue to grow. 

  

Other items that shouldn’t go into your Trust

There are other items that should not go into your Living Trust that I won’t cover here.  Please check my future blogs for possible discussion of these items (or of course consult an attorney!)

Please feel free to give me a call and we can review your Estate Planning goals, or start your Estate Plan today!

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

Thanks for reading.

 

William Daniel Powell (Dan)

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Friday, 17 June 2016 02:01

Does my Home go in my Living Trust?

Does my Home go into my Living Trust?

People often ask “what items do I put in my Revocable Living Trust?”  Usually the biggest and most important item is your home.  The process for putting your home into a Revocable Trust is fairly simple.  The attorney will obtain the latest deed to your home if you don’t have one, then he or she will prepare a new deed that transfers the home from you as an individual to you as Trustee of your Revocable Living Trust.  It does not matter if you are still paying a mortgage on your home, it can still be put into the Living Trust.  If you have property outside of California, then an attorney in the other state will need to prepare a deed and have it recorded.  Your estate planning attorney will explain all of the details to you.

 

A “PCOR”, or Preliminary Change of Ownership Report is also filled out and submitted with the deed to the County Recorder’s Office.  This PCOR basically tells the County Recorder that the home is being transferred to a Revocable Trust, and that no reassessment is needed (so property taxes don’t go up!) 

   

It is important to remember that one does not lose control of their property when they create a Revocable Living Trust (sometimes called an Inter Vivos Living Trust, or just Living Trust).  Think of a Living Trust like a bucket that you built.  You decide what to put in your bucket (with advice from an attorney), and what to take out of your bucket should you so choose.  The IRS, as a matter of fact, views this bucket as an extension of you and doesn’t require a separate tax return.  You just do your taxes as normal.  If something happens to you, you can decide who is going to hold your bucket next.  This person is called the Successor Trustee.  Should you kick the bucket, you can decide what happens to what is left inside.  Forgive the attempt at humor.  We can’t take life too seriously! 

 

Please feel free to give me a call today and we can review your situation and other Estate Planning goals.  Everyone’s situation is different, and I can help create solutions. 

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

William Daniel Powell (Dan)

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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What Does the Typical Estate Plan Include?

 

Well, let’s start with discussing what a “typical” estate plan is, and is not.  The fact is that there is not really one typical estate plan as everyone’s situation is a bit different.  There is a fairly common set of circumstances that creates a “typical” estate plan, and usually covers most people.  However, there are several situations that require special estate planning, and push some people out of the more typical estate plan.

 

 

Special Estate Planning to Avoid the Federal Estate Tax

 

Most of us don’t have assets that would push us into the realm of needing to worry about federal estate tax.  If you have assets that meet, exceed, or will exceed the Federal Estate Tax Exclusion amount, then you will likely want some non-standard estate planning.  For the year 2016, the Federal Estate Tax Exemption is $5,430,000 for an individual, and $10,860,000 for a married couple.  This means that an individual can leave $5.43 million to their heirs and no Federal Estate Tax will be imposed, and a married couple can leave $10,860,000 to their heirs without worrying about triggering the Federal Estate Tax. 

 

 

Special Estate Planning Required for Other Situations

 

Some other situations that generally require special estate planning include those adults with special needs, or those with children that have special needs.  A Special Needs Trust is used to ensure that those receiving means-tested public benefits don’t become disqualified by receiving an inheritance or other income. 

 

Another familiar situation is where there is a “blended family”.  In these situations, there is a couple or person with children from a previous marriage.  Their desire is to make sure their child or children receive an inheritance.  A married couple with a “standard” Joint Revocable Living Trust is set up in such a way so that the first spouse to pass leaves everything to the surviving spouse.  As you can imagine, in a blended-family situation, the surviving spouse is free to change the distribution scheme and leave the entire estate to whomever he or she wishes.  An A/B Trust prevents this by becoming irrevocable upon the passing of the Trustor that dies.

There are other “non-standard” situations that I won’t discuss here for the purpose of brevity.  If you have questions, please contact me, or an attorney licensed in your jurisdiction.

 

 

So get on with It!  What is in a Typical Estate Plan?

 

Okay!  So for the vast majority of us, and especially those of us in San Diego, the typical Estate Plan includes:

  • If you are single, it includes a Revocable Living Trust (sometimes called an Inter Vivos Trust, Living Trust, or even perhaps just a Trust)
  • If you are married, it includes a Joint Revocable Living Trust
  • A Pour-Over Will
  • Power of Attorney
  • An Advance Healthcare Directive (sometimes called an AHCD, or AHD)
  • It also includes a HIPPA release
  • A Certification of Trust
  • Trust Summary
  • The funding of the Trust with the family home

 

So as you see, it can be a bit different for each person.  Call me today and let’s get your plan together and get you some peace of mind!

 

Please feel free to give me a call today and we can review your situation and other Estate Planning goals.  I help create solutions. 

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

William Daniel Powell (Dan)

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Tuesday, 07 June 2016 00:24

Long Term Care - Part Two

 

Long-Term Care Part 2

 

What Can I Do to Plan for Long-Term Care?

 There are a few options available in planning for long-term care.  Some of these options are:

  1. Private long-term care insurance
  2. “Self-Insurance” or paying out-of-pocket for expenses
  3. Life insurance to replace depleted assets used for funding long-term care
  4. Utilizing a Trust to provide some asset protection
  5. Use up all of your assets and live out your days in a nursing home

  

Some of the options are more desirable than others, and some may be out of reach for some people.

 

1. Private Long-Term Insurance

 Using insurance to pay for long-term care can be a great option if it is available to you.  First of all, you must be “insurable”.  This may vary from company to company.  Next the premiums must also be affordable.  Quotes for premiums are higher for older persons, and go up as you age.  Premiums for women are also usually higher than those for men.  I guess that’s the price of living a longer life!

Some questions and benefits that you should look for in long-term care insurance include (but aren’t limited to):

  • The ability to stop paying premiums while you are receiving benefits
  • Home care as well as nursing home care
  • Sufficient benefit payout to cover costs ($250 per day or more)
  • Duration of benefits (How long will the benefits be paid? 4 years? 5 years?)
  • When do benefits begin after it is established that care is needed
  • Is renewal guaranteed?

  

2. Self-Insurance

 Here, option 2 and 5 are pretty close to the same.  The real difference being how much income do you have and will it continue during your incapacity.  If it won’t continue, do you have sufficient net worth to provide your own long-term care and still provide all that you wish to your spouse, family, and loved ones?  Costs for long-term care obviously varies with the level of care required, and quality of life desired.  Do you want to live in an assisted living facility in La Jolla, your home, El Cajon (not that I have a problem with El Cajon!) or somewhere else?  If you can afford about $100,000 per year for long-term care, this may be a good option for you.  Also, you could use option 3 to replace or supplement consumed resources used for long-term care if you so desire.

  

3. Life Insurance to Replace Depleted Assets Used for Paying for Long-Term Care

 This option may be used in conjunction with any of the other options if you choose.  As long-term care costs arise, and as the bills are being paid, your assets are being depleted.  Life insurance can be employed to replace that value so that your spouse, family, and loved ones are still taken care of.  Should you not need to consume assets for long-term care, the life insurance and the assets will be there for your beneficiaries.

  

4. Utilizing Trusts for Long-Term Care

 The use of a Trust will be discussed in another blog. 

  

5. Use Up All of Your Assets and Live Out Your Days in A Nursing Home

 Again, like option 2, you are basically taking care of long-term care costs on your own.  If you have sufficient assets, then you have lived a blessed life.  If you do not have many assets and do no other planning, this will unfortunately be the default plan.  One hopes to never need long-term care, and I think most of us would prefer another option to this choice.  Choices are great, and we need to use them when we have the opportunity.

 

See lots of estate planning information on my website at: www.myestate-plan.com 

 

Please feel free to give me a call today and we can review your situation and other Estate Planning goals.  Everyone’s situation is different, and I can help create solutions. 

 

William Daniel Powell (Dan)

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Tuesday, 31 May 2016 01:58

Dave Ramsey Said I Only Need a Will

Dave Ramsey Said I Only Need a Will

First of all, let me start by saying that I respect Dave Ramsey.  Dave Ramsey, however, is not a lawyer, and he is certainly not a San Diego estate planning attorney.  Why is this relevant?  Well, Dave Ramsey quite often suggests that a Will is something that every person needs.  Moreover, he has said in his book that he thinks Trusts are unnecessary due to their cost of creation.  I agree with Dave Ramsey in that everybody needs some kind of estate plan whether that is a Will based plan, or Trust based plan.  A Will alone (or even in conjunction with the Living Will and Power of Attorney that Dave sells on his website) is not the one-size-fits-all solution that Dave Ramsey seems to suggest.  This is generally so because of the cost of Probate in California, and specifically so because of the cost of homes here in San Diego. 

 

Why can creating a Will cost more than creating a Revocable Living Trust?

Creating a Will based plan can cost almost as much as a Revocable Trust in certain situations, but it is generally a little more affordable.  A proper estate plan contains more than just a Will or just a Trust.  So much of the cost of creating a plan is the same in either option.  Also, if it takes 10 pages to dispose of items to those you choose, it will take 10 pages in a Will and 10 pages in a Trust, so the drafting time is very similar.  The real cost difference is in the cost of Probating a Will.  There is a link to one of my Blog posts above for you that details the cost of Probate in California.  The cost of a home here in California just means that the cost of Probate can go higher. 

 

So is a Will Based Plan Wrong?

No, I wouldn’t go so far as to say a Will based estate plan is always wrong.  For those with few assets, a Will may be preferred because they can take advantage of California’s simplified Probate procedure.  There are certain requirements for taking advantage of California’s Simplified Probate Process that you can read here.  But as I have stated before, a Revocable Trust centered estate plan is usually preferred to a Will because of the powers that a Living Trust provides such as:

  • A Trust is private where a Will is public record
  • A Living Trust helps you if you become incapacitated
  • Wills must be probated and the California Probate process costs time and money
  • Trusts allow for greater control over how and when the beneficiary is to receive property

 

Please feel free to give me a call today and we can review your situation and other Estate Planning goals.  Everyone’s situation is different, and I can help create solutions. 

 

See lots of estate planning information on my website at: www.myestate-plan.com 

 

Thank-you for reading.

 

William Daniel Powell (Dan)

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Tuesday, 17 May 2016 02:20

Elder Law and Estate Planning Part One

Elder Law Planning Part 1

 

What is Elder Law?

 

Elder law is simply the legal practice that focuses on the issues that affect the elder or older population.   That is kind of a big answer isn’t it? Well, it is. Elder law is not just cases that involve elder abuse, but any issue that affects the elderly. I am an Estate Planning attorney here in San Diego, and many issues that affect almost all of my clients, young or old, also affect the elderly among us. Estate planning touches almost all of the elder law issues that come to mind first such as:

  • Preventing elder abuse
  • Preventing elder financial abuse
  • Protecting and preserving assets
  • Providing for and planning for incapacity
  • Passing on our property to those we wish to pass it to
  • Managing healthcare costs
  • Managing long term care

 

An Estate Planning Attorney Better Understand Elder Law Issues

 

If estate planning and elder law are not inextricably linked, they are fast becoming more and more blended. With the issues of elder law that cross-over to estate planning, and the growing population of seniors, an estate planning attorney does his or her client a disservice by not addressing these issues with the client, even if the client does not take it upon themselves to ask. The Society of Actuaries has said that the population is aging, and growing faster than the general population. The Society of Actuaries has said that from the year 2000 to 2050, those in the age group of 65 years of age and older will grow by 147 percent, while those younger than that will only grow by 49 percent. You can look at the Society of Actuaries website here.

 

This increase of longevity is concerning because for many of us it presents a “risk” to our financial well-being. It is a risk to our financial well-being because of rising healthcare costs, problems that the Affordable Care Act (or ACA or Obama-Care) created, and because long-term care costs are also going up.

 

 

All of these issues and more will continue to be addressed in my blog.

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

Please feel free to give me a call today and we can review your situation and other Estate Planning goals. Everyone’s situation is different, and I can help create solutions.

 

Thank-you for reading.

 

William Daniel Powell (Dan)

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only. Nothing in this is to be considered legal advice. Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship. If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction. I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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What is a Trust Amendment?  What is a Trust Restatement?

 

 

So what is an Amendment to a Trust?

 

What is a Trust amendment?  An amendment to a Trust is simply where one makes a change of a provision or provisions to their Trust.  This may include where the Trustor wants to add a beneficiary like where there is a new grandchild to the family.  It can also include changing a gift to a beneficiary, removing a beneficiary, or changing how the beneficiary is to receive the gift.  There is one requirement to amending a Trust and that is that the Trust must allow such changes.  Revocable Living Trusts, or sometimes Revocable Trusts, or Living Trusts are by design amendable.  Irrevocable Trusts such as ILIT’s (Irrevocable Life Insurance Trusts), or Special Needs Trusts are just that – irrevocable.  These kinds of Trusts are used in specific circumstances, and you can read about them in my blog.

  

What is a Restatement of Trust?

 

A Restatement of Trust is basically an amendment of the entire Trust, even if it is just to change one provision.  This is better than re-drafting the entire Living Trust especially if the Trust is “funded”.  If the Trust is funded, you don’t need to create a new deed to the house and notarize and record it with the city.  Nor do you need to change any account that are held in the name of the Trust. 

 

Why do some Attorneys prefer a Restatement to an Amendment?

 

The answer to this question lies in the answer to another question – who drafted the original Trust?  Normally if you go to a new attorney, they will prefer to do a restatement.  You see, the last attorney to make a change to a Trust takes all of the responsibility for any defects in the Trust document.  Even if the new attorney only changes one word.  Now, the new attorney can read and analyze the entire document, make any updates required, make the changes you have requested, and bill for the time.  Or, simply restate the Trust with your changes and likely save time and money for you.

 

If you need changes to your existing plan, please give me a call.  I offer 100% attorney advised and prepared estate plans for a reasonable fee.

 

Please see my Blog for more discussion of various aspects of Estate Planning.

 

Please feel free to give me a call and we can establish your Revocable Living Trust or other Estate Planning goals today.  If you have specific estate planning objectives, I can help create solutions. 

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

Thanks for reading my blog.

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Advanced Estate Planning – An Overview to ILIT Trusts

 

What is a Trust?

As discussed in my other Blog posts, a Trust is a means of passing property to other persons.  A Trust is an advantageous method of passing property for several reasons.  With a Trust, you can help yourself in planning for your potential incapacity.  Also, with a Trust, you can better control how your beneficiaries receive what you leave them and can help protect those you choose as beneficiaries from bad marriages, predators, and the like.  Trusts don’t need to go through Probate and therefore save time and money.  A Trust – be it a Revocable Living Trust, or Irrevocable Trust – is a private document where a Will becomes public record when Probate is opened. 

 

 

What is an ILIT?

 

ILIT stands for Irrevocable Life Insurance Trust.  An Irrevocable Trust is just that – Irrevocable and thus not able to be changed like a Living Revocable Trust can be.  Sounds kind of scary and final doesn’t it?  Well, there are great reasons to use an Irrevocable Trust.  One reason to use an Irrevocable Trust is to create a Special Needs Trust to protect means tested public benefits like Supplemental Security Income (or SSI), or Medicaid and others.  Another great use of an Irrevocable Trust is to create an ILIT or Irrevocable Life Insurance Trust – the subject of this blog. 

 

An ILIT is typically used as an advanced estate planning technique.  When a person wishes to leave money to a person, but is either over the federal estate tax exemption amount (in 2016 it is $5.45 million for an individual, and $10.9 million for a couple), or close to reaching the federal estate tax exemption amount, the use of an ILIT is a great option.  The reason it is a great option is because properly structured, an Irrevocable Life Insurance Trust means that the proceeds of the life insurance are not includable in the insured’s estate for federal estate tax purposes.  Therefore, tax savings are realized.

 

 

How does an ILIT (Irrevocable Life Insurance Trust) work?

 

For the rest of the explanation of ILIT Trusts and how they work, please see Part 2 of this Blog.  Thank you.

 

See lots of estate planning information on my website at: www.myestate-plan.com 

Please feel free to give me a call and we can establish your Living Revocable Trust, ILIT, or other Estate Planning goals today.  If you have specific estate planning objectives, I can help create solutions to achieve your specific purpose. 

 

Thanks for reading my blog.

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Wednesday, 04 May 2016 01:29

Prince Dies Without a Will or Trust

Prince Didn’t Have any Estate Plan!

 

I am always surprised to hear about people that die without any estate plan in place.  I am especially surprised to hear when people with large estates pass away with no plan in place.  This was the most recent case with Prince.  Price died with no Will, and no Trust.  Yesterday a special administrator was appointed.  Now everything that transpires, because the estate will have to be probated, will be public record.  Moreover, a Will is not private, and is easier to contest (generally) than a Trust.  Michael Jackson died with a Will and provided for his children via testamentary trusts, but still this is a public transaction that could have been avoided with a proper estate plan perhaps utilizing a Living Revocable Trust, Irrevocable Trust, or other means.

 

Upon hearing that people die without estate plans in place make me wonder why.  I wonder if they think they are too young to die, or if they think they are too young to plan.  Perhaps they don’t prefer to contemplate their own demise.  No matter the reason, we all know and need to come to grips with the fact that we could die at any age, that having a plan is far better than not planning, and planning for our demise is one of the best gifts we can give to those we love.  A Revocable Living Trust, an Advance Healthcare Directive and other proper estate planning methods can take tremendous stress off of your family.  It can also minimize fighting among family member (not always, I’ll give you that!) and insure that your hard earned assets are given to those you desire to provide for.

 

I believe you are never too young to plan, no estate is too small to prevent providing some peace of mind, and planning is an excellent way to show that you care and that you are remembered.  Please feel free to give me a call and we can establish your Living Revocable Trust or other estate plan objectives.  If you have specific estate planning goals in mind, I can help create solutions you may not be aware of. 

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

Thanks for reading my blog.

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Trustee Compensation: How Much Are Trustees Paid?

What is a Trustee?

One that creates a Living Trust (or Irrevocable Trust, or other kind of Trust) is called the Settlor or Trustor.  The Beneficiary receives the benefit of the Trust and is said to hold the equitable title to the property.  The Trustee hold the legal title and is essentially the manager of the property for the benefit of the Beneficiary.  Most of the time when a couple or individual sets up a Revocable Living Trust, they will be the Settlor, Trustee, and the primary Beneficiaries.  In the case of a married couple, they will be considered co-trustees.  A co-trustee can usually act alone, or in conjunction with the other co-trustee, and takes over if the first Trustee dies or becomes incapacitated.

 

What is a Successor Trustee?

A Successor Trustee takes over as Trustee upon the occurrence of a specific event.  Usually this event is when the Trustee dies or loses capacity.  The successor Trustee is usually a trusted family member or friend of the family.  Sometimes the Successor Trustee will be a Professional Fiduciary Trustee.  This may be advantageous in a variety of situations including where the Trustor has no family, where the children Beneficiaries don’t get along, or where the Trust may continue for a long period of time after the Trustor death.

 

Trustee Compensation

The Trust document itself can detail how much the Trustee compensation will be, and how it is to be paid.  California Probate Code section 15680 says in part that if the Trust provides for compensation, then the Trustee is entitled to such compensation, and that the amount may be adjusted up or down by the court if the Trustee duties are substantially different from those contemplated when the trust was created, where the compensation in accordance with the terms of the trust would be inequitable or unreasonably low or high, or in extraordinary circumstances calling for equitable relief.  Further, the Probate Code dictates that any such raising or lowering of compensation will only be applied prospectively after the court order is made.

 

California Probate Code also says that if the Trust document does not specify what the Trustee compensation will be, then the Trustee is entitled to “reasonable compensation” (Probate Code section 15681).  Moreover, the court can order that the compensation continue for as long as the court determines proper in either situation – where the Trust document details compensation, and when the Trust document does not (Probate Code section 15682).

 

There are other rules and situations that affect Trustee compensation that will not be discussed here in this particular blog. 

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

Please feel free to give me a call and we can establish your Living Trust or other estate planning objectives today. 

 

Thanks for reading my blog.

 

William Daniel Powell

619-980-2297

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Published in Trustee Compensation
Page 1 of 4

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