Questions and Answers

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Living Trusts are private, detailed, legal documents designed specifically for you and your family’s needs. If a Trust is designed and drafted properly it should protect your loved ones from the disadvantages of going through the costly and time consuming Probate process. All Wills, on the other hand, go through the Probate process. Probate is the legal process through which the court system transfers your assets to the beneficiaries listed in your Will. Therefore, a Will Always goes through the Probate process. If there is no Will, your assets will be distributed by the Probate court through the state intestacy laws (i.e., next of kin). One of the major disadvantages of the Probate process in the state of California is that it typically will cost your estate Five times more than a Trust administration (the process whereby your named successor trustee marshals your assets, pays off your creditors, and eventually distributes your estate to your beneficiaries according to your instructions). It usually takes anywhere from Twelve to Twenty-Four Months for a straightforward Probate process to take place. This is due to the budget cuts in the court system and the overloaded court calendars. Probate is open to public inspection which opens the details of your estate to prying eyes and prospective con-artists. Based on the foregoing reasons, it is imperative that you create A Living Trust for you and your loved ones’ benefit today.

Probate is a court process where the court appoints an individual who is called administrator to be in charge of your estate. The administrator gathers your assets, pays your bills and sells some of your assets if necessary. He or she will be in charge of filling your tax returns and distributing your assets to the appropriate persons or entities. All of this is done under the court’s supervision, without any input from your family. The Probate process is costly and time consuming. One of the major disadvantages of the Probate process in the state of California is that it typically will cost your estate Five times more than a Trust administration (the process whereby your named successor trustee marshals your assets, pays off your creditors, and eventually distributes your estate to your beneficiaries according to your instructions). It usually takes anywhere from Twelve to Twenty-Four Months for a straightforward Probate process to take place!

Joint tenancy only delays probate; it will not avoid it. It is not a good idea to put your house in a Joint Tenancy with your children for the following reasons: 1. If your children are sued, their creditors can collect any judgment the creditors have against your children from the equity in the house. 2. If your children want to sell the house when you pass away, they may have to pay unnecessary capital gains taxes if you gift your house to your children while alive. 3. If you go into a nursing home and need to qualify for Medi-Cal, the state will have a lien on your house for any amounts paid for Medi-Cal benefits. 4. Your children as Joint Tenants will be able to transfer their share of the house without any notice to you at any time. Contact our firm to learn more about Joint Tenancy, other forms of title and how it will affect your assets. Remember, a well-drafted Estate Plan can benefit you and your family a lifetime, saving you and your loved ones time and money!

A step-up in basis is the readjustment of the value of an appreciated asset for tax purposes upon inheritance. When an asset is passed on to a beneficiary, its value is typically more than what it was when the original owner acquired it. The asset receives a step-up in basis so that the beneficiary's capital gains tax is minimized. A step-up in basis is applied to the cost basis of property transferred at death. The best way to take advantage of this tax saving is to title your assets in your trust. Call us today so we can establish your comprehensive estate plan and assist you in titling your assets properly.

The Federal Estate Tax is calculated on the value of the assets in your estate at the time of your death (minus any claims against your property). A portion of the estate is “exempt” from taxes. The amount over the exemption amount is subject to the Federal Estate Tax. The amount of the exemption has shifted and changed over the years. If you do the right planning required to avert having an estate tax liability, then the Answer Is No. At First Class Counsel, we have many tools and techniques to effectively plan for estate tax contingencies. For example, married couples who are US citizens can easily take advantage of the Unlimited Marital Deduction and leave everything to their spouse’s estate tax free. However, when that spouse passes, there could be an estate tax on his or her estate. There are ways to plan to maximize the use of both spouses’ federal estate tax exemptions in their revocable trust. Call our office to learn more about the details.

Our Physician’s Directive (also called a living will) is part of our Estate Planning Package. It is designed to make a potentially difficult time easier for your loved ones and reduce their burden. You can decide what treatments and care you would like and avoid the ones you don't. This will reduce the risk of a communication conflict between your family members and health care providers. Please contact us today if you have any questions regarding advance care planning.

At First Class Counsel, we usually draft your Living Trust within 2-3 weeks, ready for your signature and notarization. Your Living Trust will be part of your Estate Plan Package, which includes a Pour-Over Will, Durable Power of Attorney, Health Care Directive and your Last Wishes. Prior to your Trust signing appointment, we meet with you at your convenience either at our law firm or over the phone to go through the specific details of your assets, answering all your questions and going through your best options for asset protection, tax and Medi-Cal planning.

A special needs trust shelters income and resources that might otherwise interfere with eligibility for government programs such as Social Security and Medi-Cal (Medicaid). A Special Needs Trust can enhance quality of life over and above the basic benefits programs.

A Special Needs Trust covers the percentage of a person's financial needs that are not covered by public assistance payments. The assets held in the Trust do not count for the purposes of qualifying for public assistance, as long as they are not used for certain food or shelter expenditures. Proceeds from this type of trust are commonly used for medical expenses, payments for caretakers, transportation costs, and other permitted expenses. The person who creates the trust will designate a trustee who will have control over the trust, overseeing its management and the disbursement of its funds. Call First Class Counsel to learn more about Special Needs Trusts and if they can benefit any of your family members.

A Conservatorship is a court process whereby the court appoints a person or entity to be in charge of your affairs if you are unable to do so. This is done under the court’s supervision. A proper Estate Plan should avoid the need for a Conservatorship. Our firm will create a detailed Power of Attorney for your benefit, part of our Estate Planning Package, in order to avoid the need for a Conservatorship. You will be able to designate the people you trust to handle your financial decisions once you are unable to do so for yourself with a legally valid Power of Attorney document.

It is never too late for Medi-Cal and Long-Term Care planning. Our firm offers effective strategies that can be implemented in emergency situations. The longer you wait the fewer options will be available to you. Early planning provides you with more options, such as creating Estate Planning documents with Medi-Cal and Long-Term Care planning language included, making sure your appointed agent(s) can carry out further planning if you eventually become incapacitated. Contact First Class Counsel to learn more about our Medi-Cal and Long-Term Plans. We will guide you through these very important decisions.

Medi-Cal will try to recover its expenses from the assets the Medi-Cal beneficiary owns at the time of his or her death, including the beneficiary’s home. Your home can be protected with effective Medi-Cal planning. Call First Class Counsel to get more information about this important topic. We will go over every detail of your assets and set up a proper Estate Plan Package for you and your family in order to protect each and every important asset you own. Medi-Cal recovery could wipe out a person’s estate leaving the children, spouse, and family little or no inheritance. With proper qualification and planning we can protect your assets from recovery. Legal costs are minimal when compared to losing the equity in your home. When a Medi-Cal beneficiary dies and has no remaining estate, Medi-Cal has no assets to recover against. Properly transferring assets out of the Medi-Cal beneficiary’s name should only be done using a qualified attorney. Without professional legal guidance you could incur expensive Medi-Cal transfer penalties.

Medi-Cal has strict regulations concerning asset transfers which should be followed carefully. Improper transfers may result in a significant period of ineligibility during which an individual cannot receive Medi-Cal benefits. Transfers can also have negative estate and capital gains tax consequences. You should consult with one of our attorneys before making any transfers.

In general, you are not responsible for your parents’ bills after they have passed away. However, if you have assumed the responsibility, you will be liable for the payments. If you become the administrator of your parents’ estate, you will be responsible to pay their bills, but only out of their assets.

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