1. What is Probate?
Probate refers to the mandatory, court-supervised process to handle the disbursment of a deceased person's estate. It is required of all estates (over $100K) that are not protected by a Living Trust, regardless of whether or not the person had a will. The probate process - if uncontested - will typically take18-24 months and includes the following: proving the authenticity of the deceased person's will, appointing someone to handle the deceased person's affairs, identifying and inventorying the deceased person's property paying debts and taxes, identifying heirs, and distributing the deceased person's property according to the will or, if there is no will, according to state law. The entire proceedings of Probate become a matter of public record.
2. So what is the Problem?
First, control of the estate will be left up to the Probate Court. It may or may not distribute assets according to the wishes of the deceased, and may involve people other than the deceased would have desired. Second, the Probate Courts in California are terribly backlogged, causing long and often frustrating delays for loved ones already going through a difficult emotional period. Third, court, attorney, and other fees can siphon off 10% or more of the value of the estate, meaning - when they eventually get it - the heirs will receive substantially less than the decedent intended. Fourth, if the estate is valued over the prevailing exemption limit, the assets could be subject to unnecessary inheritance taxes. Finally, probate exposes the entire proceedings to the public eye for all the world to see.
3. So how is a Living Trust the solution to the problem?
Quite simple . . . When a living trust is established, title to the assets in the estate is transferred to the Living Trust. The trustee (usually the owner/creator of the trust) retain full control of the assets during his/her lifetime. When the trustee dies, assets in the trust are not subject to Probate and the details of distribution are kept completely private. The appointed executor then follows the provisions set forth by the trustee. (This is the process of distributing the trust assets to the named beneficiaries), without court intervention.
There are obviously many details to the process of establishing Living Trusts. FAMILY TRUST SERVICES is fully dedicated to helping families avoid Probate. For those who are UNPREPARED (no Living Trust), we provide free consultations to help them first understand their predicament, and provide solutions.
4. So what happens after a person dies?
Settlement of the trust estate begins. The appointed successor trustee(s) - often with competent assistance from the firm that set up the trust - will:
* take inventory of all provisions made in the last will
* take inventory of all directives made regarding personal properties, jewelry, heirlooms, and household goods
* take inventory of all changes, revisions, amendments, additions and deletions to the trust
* take inventory of all beneficiaries & distribution instructions
* take inventory of all assets & disposition instructions and add or update any asset inadvertently left out of the trust
* gather all necessary documents e.g.: death certificate, birth certificates, trust documents required by financial institutions, & government agencies
* obtain & complete documents and forms necessary to execute transfer of assets from the trust to beneficiaries
* file affidavits and federal tax forms as required by law.
5. What about conservatorship and incapacitation?
There are many causes of incapacitation that could lead to the need for conservatorship: stroke being the most common, altzheimer's disease, survived heart attack, parkinson's disease, or accidents, just to name a few. The problem is for anyone to become a conservator for a person who is already incapacitated, a "power of attorney" can only be obtained through court proceedings. Additionally, without explicit instructions whomever is appointed may be forced with impossible decisions regarding a loved-ones health and welfare.
The urgency is that although we control how we live, we have no control over how we suddenly can become incapacitated. A Living Trust can provide a solution: The Durable Power of Attorney - established while healthy and of sound mind - should be incorporated as part of a properly established Living Trust.
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