Plan on It
EPISODE 9
Estate Planning FAQs: Part 1
In this inaugural episode of the “Ask Chris Anything” Chris Botti tackles common questions about estate planning and living trusts. Chris, a board-certified specialist with over 30 years of experience, clarifies the differences between a will and a living trust, emphasizing the importance of avoiding probate in California. He discusses the appropriate age to create a trust, the process of updating it, and the timeline for establishing one. Chris also explains the significance of transferring assets like real estate into a trust and the role of a power of attorney. This episode provides listeners with practical insights into managing their estate effectively, ensuring their assets are protected and efficiently transferred to heirs.
Episode Details
A living trust can prevent your estate from going through probate, which can be a lengthy and costly process in California. If your estate is small enough that it wouldn’t trigger probate, a will might suffice. However, if you own real estate or have substantial assets, a living trust is typically more advantageous as it allows for a more efficient transfer of wealth.
The need for a living trust is less about age and more about asset accumulation. Whether you’re a young entrepreneur or accumulate wealth later in life, once you have enough assets that could trigger probate, it’s advisable to consider a living trust. It’s a tool to manage and pass on wealth efficiently, regardless of your age.
While a living trust isn’t a set-it-and-forget-it document, it generally only needs updating for significant life changes. These include changes in successor trustees or your plan of distribution. Regular life events like buying or selling assets typically don’t require updates. Review your trust when major changes occur, such as children becoming adults or changes in family dynamics.
The pace of creating a living trust is often dictated by the client’s comfort. While urgent situations can expedite the process to just a few days, a typical estate plan, which includes drafting and client interactions, can be completed within 30 days. It’s important not to rush, allowing time to reflect and make informed decisions.
Review your estate planning documents every five years or after significant life events. Ensure your successor trustees are still capable, and your plan of distribution aligns with your current wishes. Life events like a death in the family might necessitate more immediate updates.
Yes, you maintain full control over your assets in a living trust. You are the trustee and can manage, buy, or sell assets freely. The control only shifts to your successor trustee if you become incapacitated or pass away.
Absolutely. To avoid probate, you must transfer real estate into your trust. This is done via a deed, which your attorney can prepare. Failing to transfer your home into your trust means it will go through probate despite having a trust.
Generally, vehicles do not need to be titled in the trust unless they are exceptionally valuable, like a luxury car or motorhome exceeding the probate threshold. For most vehicles, it’s not necessary to go through the DMV to transfer titles to the trust.
A power of attorney allows someone to manage your financial affairs outside of the trust, like retirement accounts, if you become incapacitated. Since not all assets can be held in a trust, a POA ensures comprehensive financial management by the same person handling your trust.
An EIN, or Employer Identification Number, is not necessary for a revocable living trust while you’re alive. Your Social Security Number suffices for tax purposes. The trust requires an EIN only after your passing or if it becomes irrevocable.
First, determine if there is a will or trust. If a trust exists, the process is called trust administration; if only a will exists and probate is necessary, it’s called probate administration. Locate the necessary documents and consult with an attorney to understand the next steps in managing the estate.
