Estate Planning FAQ's

No. Establishing a Living Trust in no way affects your ability to manage or control your assets. You can actually do business in the name of your trust. You have complete control of your assets and can do anything with your assets after the trust is created that you could do before the trust was formed.

One of the main reasons to do a Living Trust is to avoid Probate. Probate takes a considerable amount of time and can be very expensive. Probate fees are calculated on the “gross” amount of your estate. Therefore, if you own a home in California, you are most likely an excellent candidate to do a Living Trust. This is one of the biggest misconceptions about Living Trusts.

California law sets forth a statutory scheme as to how your assets will be divided upon your death in the event you die without a Will or Living Trust. If you are married, your assets can transfer to your spouse. If you are unmarried and have children, all of your assets will pass to your children. However, there may be hurdles your heirs must deal with in order to facilitate the transfer of your assets.

The Court will decide where your children go in that instance. By completing the appropriate estate planning, you can express your intentions in writing before you die as to whom you would like to be the Guardian of your minor children should you die prior to the time they reach 18.

It depends. However, if your property is held in joint tenancy, upon your death, your tax basis in your property will only receive a one-half step up in the tax basis to the fair market value. With appropriate estate planning, you can assure a 100% step up in the tax basis to the fair market value upon your death. This could avoid any unnecessary capital gains issues. Furthermore, upon the death of the last joint tenant, the property will have to go through Probate unless the last surviving joint tenant died with a Living Trust.

Yes. This is called a “pour over will.” Basically a pour over will directs that any assets you have not put into your Living Trust will be divided according to your instructions in your Living Trust. However, the downside is that those assets will have to pass through the Probate Court process, but at least they will go to your named beneficiaries in your Living Trust. This is the reason to still do a Will in conjunction with your Living Trust.

No. You continue to file your taxes as you always have prior to the creation of the trust with your social security number. Since a Living Trust is revocable , it does not need a separate tax identification number and it does not file a separate tax return of its own.

No. As long as you file the appropriate documents with the county assessor’s office, your property taxes will not be reassessed in California. This is a significant issue to understand in light of Proposition 13 in California.

No. It provides no protection from creditors, lawsuits, or judgments.

No. Many people have this misconception. Creating a Living Trust and putting your assets in your trust does not protect your assets nor does it help you qualify for Medicaid. Since a Living Trust is revocable and under your complete control, you have not given any assets away.

Absolutely. The trust does not restrict your ability to borrow on your assets in any way.

No. All you must do is take title to any newly acquired assets in the name of your living trust.

It is a relatively simple and inexpensive process to make changes to your trust. You simply make an “Amendment” to your trust and incorporate the changes into your original trust.

No.

This is an estate planning document where you appoint someone to make financial decisions for you in the event you become incapacitated for any reason. Thus, the appointed person can pay your bills, deposit your checks, etc. without the need of a formal conservatorship. A conservatorship can be a burdensome and expensive process overseen by the Probate Court.

This is an estate planning document where you appoint someone to make health care decisions for you in the event you become incapacitated for any reason. Thus, the appointed person will make all health care decisions for you, with the assistance from your physician, during your period of incapacity. This avoids the need of a formal conservatorship which can be a burdensome and expensive process overseen by the Probate Court. In this document you can also designate whether or not you want life support systems in the event you are in an irreversible comatose state.

Yes you can, however, it is rarely suggested. This is an invitation for problems. The person you add may have (or in the future may have) creditors or a spouse that may try to levy or claim an interest in those assets. Furthermore, there are oftentimes, gift tax issues or tax basis issues that arise by simply putting another person on title to your assets.

Do not hesitate to call our office to discuss your question at (209) 472-9100 or you may use the contact form to contact us via email.