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EstatePlanningSeminar

EstatePlanningSeminar

“Providing Estate Planning Peace of Mind.”“Providing Estate PlanningPeace of Mind.”

Main Office:3425 S. Bascom Avenue, Suite 240

Campbell, California 95008Phone (408) 356-9200 • Fax (408) 356-8901

Aptos Office:9057 Soquel Drive, Bldg B, Suite D

Aptos, California 95003Phone (831) 476-2400

LITHERLAND,KENNEDYASSOCIATESATTORNEYS AT LAW

Estate Planning Seminar i

Table of Contents mriF eht tuobA

Your Speakers

.......................................................................... ii

Estate Planning Seminar .............................................................1

Living Probate .......................................................................... 3

Death Probate .......................................................................... 4

Death Taxes ............................................................................. 8

What a Living Trust Can Do For You .......................................... 10

Complete Estate Planning Portfolio ............................................11

Advantages of Working With Our Law Firm .......................... 12

Frequently Asked Questions About Living Trusts ........................... 13

Estate Planning Alternatives ...................................................... 15

Estate Shrinkage of Famous People Who Failed to Plan ................ 16

2019 Smith Living Trust .......................................................... 17

2019 Doe Living Trust ............................................................. 18

................................................................ ivAbout

the Founder ................................................................... iiiAbout

Estate Planning Seminar ii

ABOUT THE FIRM

Litherland, Kennedy & Associates have been providing quality estate

Litherland, Kennedy & Associates, APC, Attorneys at Lawalifornia 95008 • (408) 356-9200 • (408) 356-8901 - FAX

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planning services for our clients since 1975. Our team of qualified andexperienced individuals, many of whom have been with our firm for over 10years, are trained in the complex areas of estate planning, trusts, probate, Medi-Cal, tax law and geriatric care management. The aim of all members of the lawfirm is to help you accomplish your estate planning goals and to take themystery out of the planning process. Our knowledgeable team has helpedpeople just like you ease the burden on family members left behind. If you takeadvantage of these services today, your loved ones will be relieved of needlessattorney’s fees and government interference in settling your estate. You willalso have documents in place to assure that your financial and health caredecisions are made in a manner you see fit should you become incapacitated.But more importantly, you’ll have peace of mind knowing that your loved onesare protected.

We provide our clients the opportunity to learn more about estate planningthrough our regular Client Appreciation Seminars, quarterly newsletter “YourEstate Matters,” free estate planning checkups and unlimited telephone andemail support. We also offer a free one-hour consultation to our clients duringthose difficult days after the death or incapacity of a loved one.

If you or your loved ones would like a complimentary estate planningconsultation, you can visit our website at www.attorneyoffice.com or call ustoday at (408) 356-9200 or (831) 476-2400 to schedule an appointment. Toreceive our latest news about estate planning or upcoming law firm events,please subscribe to our blog, “like” us on Facebook, or follow us on Twitter.

Estate Planning Seminar iii

ABOUT THE FOUNDER OF THE FIRM

Roy W. LitherlandEstate Planning Attorney and Founder

services in Santa Clara and Santa Cruz Countiescontinuously since 1975.

In law school, Roy was a recipient of the Dean FaustAward and received awards and honors in incometaxation and estate taxation.

Roy is certified by the California State Bar Board ofLegal Specialization as a legal specialist in EstatePlanning, Trust and Probate Law. In addition to hisextensive legal background, he was previously licensedas a Certified Public Accountant.


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Roy is a member of the California State Bar Association, American Academy of Estate Planning Attorneys, and the National Academy of Elder Law Attorneys. In 2008, he received the honor of becoming a Fellow of the American Academy of Estate Planning Attorneys.

Roy is a frequent speaker on a variety of estate planning topics, regularly presenting educational seminars for the public as well as charitable organizations, support groups, employers, associations and special interest groups in our community.

“I am grateful to have had the privilege to be of service to thousands of families in the Greater Bay Area. It is an honor to be able to make a difference in the lives of our clients and their loved ones.”

ROY W. LITHERLAND has been providing legal

Estate Planning Seminar iv

ABOUT YOUR SPEAKERS

Justin M. KennedyEstate Planning Attorney

JUSTIN M. KENNEDY has an undergraduate degree in Political Science and History fromUniversity of California - San Diego. He earnedhis Juris Doctor degree, with a Tax Concentration,from the University of Pacific McGeorge School of Law. Justin also received the Witkin Award forAcademic Excellence in Federal Estate and GiftTax and is a member of the McGeorge School ofLaw Honor Society.


E-mail Address: justin@attorneyo�ce.com • Web Address: www.attorneyo�ce.com

Justin is certified by the California State Bar Board of Legal Specialization as a Legal Specialist in Estate Planning, Trust and Probate Law.

He is a member of the California State Bar Association, Silicon Valley Bar Association, American Academy of Estate Planning Attorneys, and the National Academy of Elder Law Attorneys. In 2019, Justin received the honor of becoming a Fellow of the American Academy of Estate Planning Attorneys.

Justin resides in Menlo Park with his wife, Holly, their son, and their cute little dog – a Chihuahua Dachshund mix. Justin enjoys hiking in Yosemite Valley and camping around Northern California.

“I assist our clients with all aspects of the estate planning process, including: the creation and/or modification of an estate plan, providing guidance upon the incapacity of a client, engaging in Medi-Cal planning, and helping the client’s trusted loved ones through the process of administrating the estate plan upon the client’s passing. When I meet with clients, I make an effort to provide an open and friendly space where the clients may ask their questions and feel that their concerns are being heard – I am proud that our law firm values our clients’ peace of mind.”

Estate Planning Seminar v

ABOUT YOUR SPEAKERS

Magdalena A. LaBranch-GonzalesEstate Planning Attorney


Maggie grew up in Silicon Valley and graduated from Prospect High School. She is an alumni member of the alpha Kappa Delta Phi and continues to give back to her community. Maggie loves to travel, hike and go to the movies. She resides in San Jose with her husband, Elias, where they are raising their two daughters.

“I am a real people person. That is why I enjoy meeting with our clients, who come from a variety of backgrounds and life paths, to talk about their lives and family. Assisting clients craft their estate plan to achieve peace of mind for themselves, and their family, is highly rewarding as an attorney.”

MAGDALENA “MAGGIE” A. LABRANCH-GONZALES has an undergraduate degree in Law and Society with an emphasis in Criminal Justice from University of California, Santa Barbara. She received both her Juris Doctorate and a Masters in Business Administration from Golden Gate University.

Maggie is a member of the State Bar of California, Silicon Valley Bar Association, and the American Academy of Estate Planning Attorneys.

E-mail Address: magdalena@attorneyo�ce.com • Web Address: www.attorneyo�ce.com

Estate Planning Seminar 1

EstatE Planning sEminar

In this seminar, we’re going to discuss subjects that most of us would rather avoid:

Death, disability and taxes. Many people do not give a single thought to the certainty of their own death; yet it will happen to each and every one of us. Estate planning forces us to face the financial and emotional conse-quences of death and take action to minimize the effects on our families. But if people were asked to summarize their estate planning wishes, most would simply say that:

• They want their estate to be distributed to the people they chooseaccording to their wishes;

• They want to avoid excessive attorney’s fees, court costs and unnec-essary delays in passing on their property; and

• They want to avoid or, at least, minimize the payment of state andfederal death taxes.

What is estate planning?

Estate planning is the creation of a definite plan for managing your wealth while you’re alive and distributing it after your death. When we talk about an estate, we mean all assets of any value that you own, including real property, business interests, investments, insurance proceeds, personal property and even your personal effects. These assets may be owned by you separately or jointly with others. Below are some examples of how married couples often hold title to property:

• Community Property: Undivided one-half interest owned by eachspouse.

• Separate Property: Entire interest owned by one of the spouses.Property was generally acquired prior to marriage or was a gift orinheritance to one spouse alone after the marriage.

• Joint Tenancy: Individual interest owned by any two or more peoplein which the survivor acquires the entire interest upon the death ofthe other joint tenants.

2 Estate Planning Seminar

What evils are we trying to avoid?

All of us face three principal obstacles in planning our estates:

• Living Probate: The expensive court proceeding to manage your estate if you are disabled

• Death Probate: The expensive court proceeding to manage and distribute your estate at death

• Death Taxes: The taxes the government demands at your death. The federal tax is currently 40% of everything you own over the exemption amount.

What are your estate planning options?

There are four basic methods you can use to plan your estate:

• Do nothing

• Hold title to your assets in Joint Tenancy

• Create a Will

• Establish a Revocable Living Trust

What happens if you do nothing?

Believe it or not, a majority of Americans choose to do nothing. Experts report that 70% of all Americans have no written estate plan. And, of those who have planned, most have created a simple will or rely on joint tenancy ownership of their assets to distribute their estate. Unfortunately, for the majority who have no plan in place, state law will dictate how their estate is to be distributed at death. As you might imagine, the government’s plan of distribution has no particular concern for the best interests of your family. There is no argument that doing nothing can result in probate costs, attorney’s fees and, of course, higher death taxes. But most people don’t realize that there can be major problems as a result of creating a simple will or holding title to your assets in joint tenancy.

This Estate Planning seminar will walk you through a discussion of each of the estate planning evils and explain what happens if you plan with joint tenancy, a simple will or a living trust.

What is Joint Tenancy and why do so many people use it?

Joint tenancy ownership is where two or more people hold title to an asset together. But unlike other forms of joint ownership, upon the death of one of the owners the entire interest passes au-tomatically to the surviving joint tenants. Actually, the full name for joint tenancy is Joint Tenancy With Right of Survivorship (JTWROS). Right of survivorship means that whoever dies last owns the whole property.

Because a joint tenant’s interest passes to the surviving joint tenants immediately at death, it’s not controlled by the owner’s will. For example, let’s say two good friends, Bob and John, owned a piece of property as joint tenants. Bob dies and his will says that upon his death all of his estate should go to his wife, Mary. What happens to his interest in the real property he owns with John? Because the title passes automatically at death to the surviving joint tenants, John will own the entire property and Mary will get nothing. This is only one of the unforeseen problems that joint tenancy ownership can create.


Is creating a Will a good idea?

Many people plan their estates by creating a document called a Last Will and Testament. A will is essentially a legal document that lays out how you want your assets distributed at death. As we’ve already learned, a will doesn’t control the distribution of all your assets. Joint tenancy property and life insurance proceeds both pass outside your will. Wills don’t take effect until you die so they are no help with lifetime planning. Upon your death, your will becomes a public document when it’s filed with the probate court and is available to anyone who wants to read it. Once your will enters the probate process, your estate is no longer controlled by your family. It’s in the hands of the court and the probate attorneys. Because a will guarantees that your estate will go through probate, it’s a very poor estate planning document for most families.

Why do so many estate planning professionals recommend a revocable Living Trust?

A revocable Living Trust is a complete will substitute. It can control all of your assets both during your life and after your death. Here’s how it works: When you set up your living trust, you transfer the title of all your major assets (stocks, bonds, real estate, etc.) from your name to the name of the trust. You then name yourself as the trustee and beneficiary. That gives you, and you alone, total and complete control of all your assets. You can buy, sell, trade, do whatever you want—just like you do now.

Here’s the difference, and the real benefit of it. When you die, there will be no assets left in your name, and, therefore, no probate for your family to endure.

Whomever you name as your successor trustee will immediately gain control of your assets to distribute them according to your exact instructions.

Living ProbateWhat is a Living Probate?

When you mention the word “probate,” most people think it’s only something that happens when you die. Unfortunately, probate can also happen while you’re alive. It’s often referred to as a “living probate” but it’s technically called a “conservatorship” or “guardianship proceeding.” If you become mentally disabled before you die, the probate court will appoint someone to take control of all your assets and personal affairs. These court appointed agents must file strict annual accountings with the court. The entire procedure is expensive, time-consuming and humiliating.

Does Joint Tenancy avoid a Living Probate?

No. Each joint tenant is required to sign documents on all major transactions involving joint property. If one of the owners is mentally disabled and incapable of handling financial matters, everything will have to wait until the probate court takes control. The court, in effect, becomes a joint owner and will continue to have a voice in managing the property until the disabled owner recovers or dies.

Does a Will avoid a Living Probate?

No. A will only takes effect at the time of your death. It has no control over events during your life.


Does a Living Trust avoid a Living Probate?

Yes. One of the most important benefits of a living trust is that it is designed to protect you while you’re alive. Part of every well drafted living trust is a section setting forth your instructions in the event you should become legally incapacitated. You can plan in advance to look after illness, disability, and even old age. The trustees you pick are bound by law to follow your instructions during these difficult times. With a living trust, there will be no need for expensive “help” from the probate court, probate lawyers or conservators.

Death ProbateWhat is Death Probate?

When you think about it, probate is not difficult to understand. At your death, your assets need to be distributed to your heirs, your debts need to be paid and any loose ends need to be looked after. You, obviously, can’t sign the deeds, write the checks or handle your business affairs. The probate court takes over those duties. The probate process is a long complicated and bureaucratic nightmare for most families. Here are the five basic steps to settling an estate:

Step One: Filing Petition and Gathering Material

A formal written petition to the court along with a filing fee must be submitted to the court to start the probate process. One of the probate court’s first jobs is to approve or appoint someone to handle the affairs of the estate. This person is called the executor, administrator or personal representative depending upon the rules of the state and whether the decedent died with or without a will. To keep things simple, we’ll call this agent of the estate a “personal representative.” Generally, the first thing the personal representative does is hire an experienced probate attorney. Although having an attorney is not always a legal requirement, it has become a practical necessity because probate paperwork and filing procedures can be very complex.

Step Two: Publishing Notice to Creditors

The second major job of the probate court is to order that the decedent’s creditors be notified so that they can present their claims to the court for payment. This requires the time consuming task of cataloguing all of the decedent’s liabilities. The creditors are notified either by notices in the local newspaper or directly by mail. The law sets a time that the probate proceeding must be left open to allow creditors the chance to present their claims. In most states, the creditor period is several months long.

Step Three: Inventory and Appraise Assets

During probate all the assets in the estate are usually frozen so that an accurate inventory and ap-praisal can be made. This means that during this period none of the assets can be distributed or sold without written permission from the court. The court will often require formal written appraisals for many items, such as real estate, antiques, collectibles, automobiles, furniture and other valuable assets. Appraisal fees can be expensive and, like all expenses, are paid for out of the estate.

Step Four: Payment of Debts, Claims and Taxes

Once all the debts and claims have been submitted and approved, they’re presented to the court for approval to pay them from the assets of the estate. Some estates may also have death tax liability and they must stay open until those taxes are paid.


During the entire probate process, disgruntled heirs or those who disagree with the provisions in the will can bring a lawsuit in the probate court. These suits are called will contests. They can hold up the distribution of the estate and are often used to intimidate heirs into settling cases that have no merit.

Step Five: Final Distribution and Closing of Estate

claims, taxes, attorney’s fees and the personal representative’s compensation and any other miscel-laneous expenses to be paid. If there’s not enough cash in the estate to pay these substantial claims, the judge can order that assets be sold at public auctions or estate sales. These transactions are often conducted in a depressed market or under the banner of “distressed sales.” Only after all the bills are

will, to the designated heirs at law. The court then closes the

How are probate fees calculated?

The way probate fees are calculated is exceedingly unfair to your family. State law sets the probate fees that attorneys and personal representatives can charge. Many states allow attorneys to charge any

percentage of the estate. Under either method, the fees can be very expensive.

Probate fees are often levied at each spouse’s death. Depending on how title was held on the date of death, a married couple could pay some form of probate fees on the death of each spouse.

Not only are these fees excessive, but the manner in which they arrive at the size of your estate bears little resemblance to its actual value. In states that use the percentage of the estate method, probate fees are calculated on your estate’s gross value without deductions for liens or encumbranc-es. This means that if you have property worth $100,000 but owe $90,000 to a bank or some other

interest you actually own. As you can see, this valuation method unfairly increases the size of your estate and results in the payment of larger fees.

Some of the fixed death probate fees for California are provided on the following page.


PROBATE FEES Percentages Attorney Fee Executor Fee Total Fee 4% of the first $100,000 ($100,000) $4,000 $4,000 $8,000 3% of the next $100,000 ($200,000) $7,000 $7,000 $14,000 2% of the next $800,000 ($1,000,000) $23,000 $23,000 $46,000 1% of the next $9,000,000 ($10,000,000) $113,000 $113,000 $226,000 0.5% for the next $15,000,000 ($25,000,000) $188,000 $188,000 $376,000

Estate Size* Statutory Attorney Fee Statutory Executor Fee Total Fee$100,000 $4,000 $4,000 $8,000$200,000 $7,000 $7,000 $14,000$300,000 $9,000 $9,000 $18,000$400,000 $11,000 $11,000 $22,000$500,000 $13,000 $13,000 $26,000$600,000 $15,000 $15,000 $30,000$700,000 $17,000 $17,000 $34,000$800,000 $19,000 $19,000 $38,000$900,000 $21,000 $21,000 $42,000

$1,000,000 $23,000 $23,000 $46,000$1,100,000 $24,000 $24,000 $48,000$1,200,000 $25,000 $25,000 $50,000$1,300,000 $26,000 $26,000 $52,000$1,400,000 $27,000 $27,000 $54,000$1,500,000 $28,000 $28,000 $56,000$1,600,000 $29,000 $29,000 $58,000$1,700,000 $30,000 $30,000 $60,000$1,800,000 $31,000 $31,000 $62,000$1,900,000 $32,000 $32,000 $64,000$2,000,000 $33,000 $33,000 $66,000$2,100,000 $34,000 $34,000 $68,000$2,200,000 $35,000 $35,000 $70,000$2,300,000 $36,000 $36,000 $72,000$2,400,000 $37,000 $37,000 $74,000$2,500,000 $38,000 $38,000 $76,000$2,600,000 $39,000 $39,000 $78,000$2,700,000 $40,000 $40,000 $80,000$2,800,000 $41,000 $41,000 $82,000$2,900,000 $42,000 $42,000 $84,000$3,000,000 $43,000 $43,000 $86,000$3,100,000 $44,000 $44,000 $88,000$3,200,000 $45,000 $45,000 $90,000$3,300,000 $46,000 $46,000 $92,000$3,400,000 $47,000 $47,000 $94,000$3,500,000 $48,000 $48,000 $96,000$4,000,000 $53,000 $53,000 $106,000$4,500,000 $58,000 $58,000 $116,000$5,000,000 $63,000 $63,000 $126,000

*Does not include encumbrances, such as mortgages and debts


How much does Probate cost?

Despite what probate lawyers say, probate can be very expensive. A recent national survey revealed that the average cost is between two and three percent of the gross value of the estate. A full sixty percent of the cost goes to lawyers and forty percent to personal representatives and others. One legal scholar who urges a reform in the probate system remarked that “the cost of probate expands to consume the money available.” Small estates are particularly vulnerable because even reasonable fees can eat up a large percentage of an estate’s assets. There just isn’t that much to go around.

How long does Probate take?

The slow progress of your estate through probate can be very frustrating for the family. Although this complex process usually takes at least one and a half years to complete, many estates take years. Most people assume that their estates are simple and will glide through the system. Regardless of how

of all the steps that must be completed to the satisfaction of the court.

Are the details of the estate kept private in Probate court?

No. All probate proceedings are open to the public. Anyone who has an interest can pull your

appraisal of every asset you owned at death. It reveals the name of all your creditors and amount

inheritances. This information is often compiled and sold to those who use the information to sell products and services to vulnerable surviving family members. It can be particularly damaging if

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What happens to the real estate located in another state?

A probate must be instituted not only in the state where you lived, but in every state where you owned real estate. This is called an ancillary probate. Each state has probate jurisdiction of the real

each state and hire local counsel to represent the estate. Of course, this will add to the expenses that must be paid before your family receives its share.

Are there any other problems with a Death Probate?

Yes. Perhaps the most important disadvantage of death probate is that your family loses control of the estate. During probate, it may not be able to sell assets without court approval even if it needs the money. Opportunities can be lost because the cumbersome probate system moves so slowly.

Your family may pay an emotional price in probate as well. Because the process takes so long, it can be a constant reminder of the loss of a loved one. It can also foster arguments among family members who would normally seek support from one another. It’s common to see family members taking out their frustration about the system on one another, especially if one of the family members has been named the personal representative of the estate.

Does Joint Tenancy avoid a Death Probate?

Well, the answer is yes and no. In the case of a husband and wife who own their assets in joint

surviving joint tenant. However, when the surviving spouse dies, there will be a complete probate on the entire estate.

reward for the many other disadvantages of joint tenancy ownership. It can lead to huge unexpected liability when parents and children own assets together. In community property states it creates

tax problems. For these reasons, estate planning experts agree that joint tenancy may be the poorest estate planning tool.

Does a Will avoid a Death Probate?

No. In fact, a will guarantees probate. The word probate actually comes from the Latin and it means “to prove the will.” All property that is controlled by your will must go through the probate court. Once your estate enters the probate process, it’s trapped in the system until the judge releases it.

Does a Living Trust avoid a Death Probate?

Yes. All assets transferred to a living trust completely avoid the probate process, both during your life and at your death. Living trusts are not new. They’ve been successfully used in one form or another since the Middle Ages. Both then and now, the living trust has required that the owner of assets transfer title from his or her name to the name of trust. This really means changing the title to your property. For real property, it means you will sign a new deed. For other assets, you sign special transfer documents changing ownership to the name of your trust. Once the process is complete, all your assets will be owned by the trust. Almost nothing will be owned by you person-ally. Your living trust has title to the assets, but don’t worry, you, or you and your spouse if you’re married, have complete control of the trust while you’re alive. You can amend the trust or even revoke it whenever you like. But when you die, there are no assets in your name so there’s no need to go through probate. The trust already has your written instructions directing your hand picked agent, the successor trustee, about how you want your estate distributed.

With a living trust, there’s no need for “help” from the probate court or probate lawyers. Your trust will completely eliminate these unnecessary costs. Moreover, your estate can be distributed instantly at your death. There are no judges to consult or bureaucrats to please. Your trustee merely follows your instructions in distributing your estate according to your wishes.

Death TaxesWhat are Death Taxes?

In addition to the expense and delay of probate, your family may also be liable for death taxes. There are two types of death taxes: the federal estate tax and the state inheritance tax. Many states have abolished the inheritance tax but the federal estate tax is still around and it’s one of the largest taxes a family will ever have to pay. It’s a tax on your right to transfer property to others at your death. Current federal law provides an estate tax of 40% of every dollar in your estate over the amount of the exemption.



Do all estates pay Federal Estate Taxes?

No. The federal government has given every person in the United States an exemption for estate tax purposes. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 enacted a $5 million exemption in 2011, allowing for annual increas-

Is there an Estate Tax Deduction for married people?

Yes. In addition to the phased-in personal exemption that everyone gets, the federal government has exempted all transfers of wealth between a husband and wife. This is called the Unlimited Marital Deduction and it means that regardless of the size of your estate there will be no federal estate taxes

that this is merely a postponement of tax. There will be a tax on the estate of the surviving spouse

to appreciate in value, taxes may be paid at a higher rate.

WARNING: There is no unlimited marital deduction for surviving spouses who are not U.S. citizens. Without special planning, all non-citizen spouses are restricted to the tax-free transfer of the personal exemption amount from their deceased spouses.

What if you have a small estate, do you need to worry about estate planning?

Yes. While an estate under the exempt amount is free from federal estate taxes, you will proba-bly not avoid a living probate if you become disabled or a death probate when you die. Remember, probate and federal estate taxes have nothing to do with each other. Estate taxes are paid to the federal government for the right to transfer property at your death. Probate fees and costs are paid to the probate court, attorneys and the personal representatives of your estate for supervising the

How can I create a Living Trust?

planning professionals. You should be prepared to discuss the following issues:

• How your assets are to be distributed after your death, and

• The names of the people you want to manage your assets if you become mentally disabled, and after your death.

es based on the rate of inflation. In 2017, the Tax Cuts and Jobs Act increased the exemption to $10 million, indexed for inflation, however, this doubling expires at the end of 2025. In 2019, the exemption is $11.4 million. That means if your estate at the time of your death is less than the exemption, there will be no federal estate taxes due. In deciding whether your estate is greater than or less than the exemption, the government includes everything you own, even the face value of your life insurance policies.


What a Living Trust Can Do For YouA Living Trust Eliminates a Living Probate.

If you become disabled or are unable to manage your estate, your living trust avoids the need for a court mandated conservatorship. The successor trustee you’ve named will step in and manage your affairs without government interference and expense.

A Living Trust Avoids Death Probate.

Although there will be the need to perform a trust administration after your death, the assets in your Living Trust avoid the delay and cost associated with the death probate process. There will be no probate attorney’s fees or court costs. Furthermore, because probate is avoided, your estate planning goals will not be subject to public scrutiny as is often the case in probate proceedings.

A Living Trust Provides Privacy.

Because a Living Trust avoids probate it provides privacy. Probate is a public process. Anyone

They do not even need a good reason. They could be nosy neighbors or relatives, or worse yet, they could be scam artists.

A Living Trust Can Reduce or Eliminate Federal Estate Taxes.

With a living trust, a married couple can pass twice the exempt amount absolutely estate tax-free to their heirs. That means, with proper tax planning a married couple can presently make a tax-free

A Living Trust Allows You to Restrict How Your Estate is Managed and Spent Even After Your Death.

It can provide for the care, support and education of your children by turning over assets to them at an age chosen by you. Even insurance proceeds can be paid to the trust so your successor

A Living Trust Can Protect Children From Their Creditors and Ex-Spouses.

A living trust can leave your assets to your children in a manner that will reduce the ability of their creditors or ex-spouses to take your children’s inheritance from them.

A Living Trust Can Protect Children From Earlier Marriages.

Both the surviving spouse and the children from a previous marriage can receive fair treatment and protection under the terms of your living trust.

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lawyers from successfully attacking your estate plan.

transfer of $20,000,000 ($22.8 million in 2019 indexed for inflation). A single person can pass $10,000,000 ($11.4 million in 2019 indexed for inflation).


A Living Trust Gives You Peace of Mind.

When your living trust is completed, you and your family will relax knowing that your estate will be managed and distributed by someone you have selected and trust.

Complete Estate Planning Portfolio Revocable Living Trust: Avoids Living Probate, Death Probate and reduces or eliminates federal estate taxes

Trust Property: Summary of assets owned by Living Trust

Pour Over Will: Transfers any assets outside of the Trust into the Trust

Community Property Agreement: For married couples. Changes Joint Tenancy assets to community property to avoid capital gains taxes

Certificate of Trust: Summary copy of selected portions of your Living Trust

Funding Instructions: Guidelines for transferring assets to your Living Trust

Life Insurance Summary: Information on all Life Insurance Policies

Location List & Family Information: Where all important documents are located. People to notify in case of death or incapacity

Legacy Plan: Distribution of small items of personal property, burial and funeral instructions

Property Power of Attorney: Authorizes someone to manage your property if you

become incapacitated

Health Care Documents: Health Care Power of Attorney authorizes someone to make health care decisions if you become incapacitated, HIPAA authorizes individuals to find out how you are doing


ADVANTAGES OF WORKING WITH OUR LAW FIRM

• FREE Client Appreciation Seminars. Each year, we offer exclusive clientappreciation seminars on various estate planning topics such as AssetProtection, Medi-Cal Planning, and more!

• FREE unlimited telephone and email support. Answers to our estateplanning clients’ questions are never more than a free telephone call oremail away. Whether you need specific help with your own Trust orjust want information on other estate planning strategies, give ourhelpful team a call or send us an email.

• FREE subscription to our quarterly newsletter, Your Estate Matters,where you’ll learn about estate planning topics and other informativesubjects relevant to you and your family’s needs.

• FREE announcements of dates, times and topics for future educationalseminars available to the general public.

• FREE

• FREE Estate Plan checkups regularly, with more frequent reviewsavailable if you so desire.

• FREE

Finally, as a member of the American Academy of Estate Planning At-

who can assist you with out-of-state transfers of title, provide help should you move to another state, or simply offer a referral to an out-of-state friend or family member who needs estate planning help. In addition, the Academy provides its members with substantial legal, technical and practice manage-ment support to ensure we provide high quality estate planning service to our clients.

or incapacity of a loved one. During this meeting, we’ll be available tohelp guide you through the essential steps you’ll need to undertake inthe administration of the Trust. If you need additional support, ourservices will be available to you or the surviving Trustee at a flat rate.


Frequently Asked Questions About Living TrustsCan I act as my own trustee?

be the trustee of your own living trust. In fact, most living trusts have the people who created them acting as their own trustees. If you’re married, you and your spouse can act as co-trustees.

What can I do with my assets once they are in my Living Trust?

If you’re the trustee, you can do anything you want with the trust assets. When you set up your living trust, you are transferring the title of all your assets from you as an individual to yourself as

-

your trust. If you want, you can spend, save, invest or even give the assets away at your discretion. There are no restrictions on what you can do with the assets in your living trust. Moreover, if you don’t like the terms of the trust, you can amend it or revoke it at any time without penalty.

Will my Living Trust avoid income taxes?

No. The purpose of creating your Revocable Living Trust is to avoid living probate, death probate, and reduce or eliminate federal estate taxes. It’s not a vehicle for reducing income taxes.

liabilities are created.

If I transfer real estate into my Living Trust, will my property taxes go up?

No. Transfers into your living trust have no effect on your property taxes.

If I’m only a part owner of property, can I transfer my share into a Living Trust?

Yes. Your share can go into the trust without changing the interests owned by others.

Will I have to consult an attorney every time I buy new assets?

No. Once your current assets are transferred to your living trust, you take title to all new assets in the name of the trust and they will automatically be owned by your trust.

Does my Living Trust need to be registered or recorded anywhere?

No. Your living trust is a private document which is not recorded. However, if you own any interest in real estate, the new deeds showing trust ownership will be recorded.

Can I sell assets owned by my Living Trust without complications?

Yes. You sell assets in the same way you currently do. You will, however, add the word “Trust-ee” after your signature.


Can I change the terms of my Living Trust?

Yes. While you’re alive and competent, you can alter your living trust or even revoke it without penalty at any time. Additional legal fees may apply.

Can I transfer real estate into my Living Trust?

Yes. In fact, all real estate should be transferred into your living trust. Otherwise, upon your death, depending upon how you hold title, there will be a death probate in every state where you own real property. When it’s owned by your living trust, there is no probate anywhere.

Is my Living Trust just a tax loophole that the government will close down?

No. Your living trust has been authorized by the law for centuries. The government has no interest in making you go through a living probate or a death probate. Those proceedings only clog up the court system. The only portion of your trust that will be affected is the amount of the federal estate tax exemption. The exemption is currently $10,000,000 per person ($11.4 million in 2019

Can I transfer my separate property as well as my community property into my Living Trust?

Yes. All of your assets, both separate and community, are transferred into your living trust but they are not commingled. Separate property assets retain their separate property character while in your trust. If your marriage breaks up, all assets come out of your living trust in the same way they went in: Community property is divided between the spouses and separate property is returned to the party who originally owned it.

Can any attorney create a Living Trust?

No. The drafting of your living trust should only be done by an attorney trained in the area of

of living trusts. After all, your trust will be the document which manages and disposes of all your

What if I move to another state, is my Living Trust still valid?

Yes. Your living trust is valid in all 50 states and the District of Columbia, regardless of the state where it was originally created.

Is a Living Trust only for the rich?

No. A living trust can help anyone who wants to protect his or her family from unnecessary probate fees, attorney’s fees, court costs and federal estate taxes. In fact, if your total estate is greater than $100,000, a living trust offers substantial protection for your family.


Is a Living Trust a good idea for a single person?

Yes. If you’re widowed, divorced, or unmarried, a living trust offers protection for your estate, as well. It will completely eliminate a living probate, a death probate, and you can pass $10,000,000free of federal estate taxes ($11.4 million in 2019 indexed for in�ation.)

It also allows you to leave your assets to your children, family, or friends so that they will be protected from their creditors and ex-spouses.

Are there any major disadvantages to a Living Trust?

No. Because you have complete control of all assets in your trust, you’re free to manage your living trust in any way you want. Also, because your living trust is revocable, you have the right to make any changes in it while you’re alive and competent.

Estate Planning Alternatives

PlanningAlternatives

IntestateSuccession(No Will)

JointTenancy

LifeInsurance

SimpleWill

Testament-ary Trust

UnfundedLivingTrust

FundedLivingTrust

No Yes Sometimes No No No Yes

No No No No No No Yes

No No No No Sometimes Sometimes Yes

No No No No No No Yes

No No Sometimes No No No Yes



Avoids probateat death of first

spouse

Avoids probateat death of

second spouse

Providesmaximum tax

savings

Avoids LivingProbate

Provides familyprivacy

Establishestrust for

beneficiaries

Preventsattachments ofbeneficiary’s

assets


Estate Shrinkage of Famous People Who Failed to Plan Name Estate Size Total Net Estate Percentage Settlement Costs Shrinkage*

W. C. Fields $ 884,680 $ 329,793 $ 554,887 37%

Nelson Eddy $ 472,715 $ 109,990 $ 362,725 23%

Franklin D. Roosevelt $ 1,940,999 $ 574,867 $ 1,366,132 30%

Humphrey Bogart $ 808,378 $ 172,466 $ 635,912 21%

Clark Gable $ 2,478,299 $ 772,811 $ 1,705,488 31%

Dean Witter $ 7,451,055 $ 1,830,717 $ 5,620,338 25%

Henry J. Kaiser, Sr. $ 5,597,772 $ 2,488,364 $ 3,109,408 44%

Al Jolson $ 4,385,143 $ 1,349,066 $ 3,036,077 31%

Gary Cooper $ 4,339,968 $ 885,437 $ 3,454,531 20%

Myford Irvine $ 13,445,552 $ 6,012,685 $ 7,432,867 45%

Walt Disney $ 20,982,796 $ 4,789,888 $ 16,192,908 23%

William E. Boeing $ 22,386,158 $ 10,589,748 $ 11,796,410 47%

William Frawley $ 92,446 $ 45,814 $ 46,632 49%

Hedda Hopper $ 472,661 $ 165,982 $ 306,679 35%

Marilyn Monroe $ 544,810 $ 174,384 $ 370,426 32%

Erle Stanley Gardner $ 1,795,092 $ 636,705 $ 1,158,387 35%

Cecil B. DeMille $ 4,043,607 $ 1,396,064 $ 2,647,543 35%

Elvis Presley $ 6,332,882 $ 3,542,083 $ 2,790,799 56%

J. P. Morgan $ 16,539,809 $ 11,312,018 $ 5,227,791 68%

John D. Rockefeller, Sr. $ 26,771,834 $ 16,991,640 $ 9,780,194 63%

Alwin C. Ernst, CPA $ 12,642,431 $ 7,124,112 $ 5,518,319 56%

Frederick Vanderbilt $ 76,838,530 $ 42,846,112 $ 33,992,418 56%

Howard Gould $ 67,535,386 $ 52,549,682 $ 14,985,704 78%

* (Total Settlement Costs ÷ Estate Size)

Karen Carpenter $ 6,110,476 $ 2,867,231 $ 3,243,245 47%


• Complete control of assets (Survivor’s Trust) • Right to give away assets (Survivor’s Trust) • Trust Protector allocates decedent’s assets between Family Trust and

Marital Trust • Assets in Family Trust grow estate tax free • Assets in Marital Trust get a step up in basis at second death • Assets in the Family Trust may be used for deceased spouse’s descendants • Possible creditor protection (Family and Marital Trusts) • No probate on death of first spouse • No estate tax on death of first spouse • Avoids conservatorship for surviving spouse

PERIOD #1 Both Spouses

Living

PERIOD #2

SurvivingSpouse

• Avoids conservatorship • Manages each spouse’s share of assets

Husband and Wife are: • Trustors • Trustees• Beneficiaries

Surviving Spouse may be: • Trustor• Trustee• Beneficiary

• Flexibility of distribution • Minimizes outside interference • Protects grandchildren if child dies

• No probate on death of surviving spouse • Some options decrease death taxes • Some options provide divorce and

creditor protection to beneficiaries • $22.8 million can be passed estate tax-free

DEATH OF FIRST SPOUSE

• Complete control of assets • Can be amended or revoked • No change in income taxes

DEATH OF SURVIVING SPOUSE

2019 SMITH LIVING TRUST HTIMS ENAJ HTIMS NHOJ

Trustors

PERIOD #3

Both Spouses Deceased

Successor Trustee(s): • Manage assets • Distribute assets to

beneficiaries

SURVIVOR’S TRUST

REVOCABLE “A”

FAMILY TRUST / MARITAL TRUST (Trust Protector Election)

IRREVOCABLE“B”Principal for

Needs

All Income

CHILDREN 90%

INCOME AND PRINCIPAL FOR NEEDS

JOSEPH 10%

IMMEDIATE


2019 JOHN DOE LIVING TRUST

JOHN DOE, Trustor

DEATH OF TRUSTOR

PERIOD #1 Trustor is

Living

• Complete control of assets • Avoids conservatorship/guardianship • Can be amended or revoked • No change in income taxes • No change in property tax

JOHN DOE is: • Trustor • Trustee • Beneficiary

PERIOD #2

Trustor is Deceased

Successor Trustee(s): • Manage assets • Distribute assets

• No probate on death of Trustor • Some options decrease death taxes • Some options provide divorce and

creditor protection to beneficiaries • Flexibility of distribution • Minimizes outside interference • Protects grandchildren if child dies • $11.4 million can be passed estate tax-free

JOHN JR. 50%

INCOME AND PRINCIPAL FOR NEEDS AGE 45

SUSAN 50%

IMMEDIATE

Estate Planning Seminar

Notes

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