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cunninghamlegal3 · 2 years

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california living trust attorney

You’ve lost a loved one, and now it’s time to think about moving their assets, their homes, their cars, and other goods on to their heirs: a group which may well include yourself. Unless it’s your spouse who passed, or unless assets are within PODs (Payable on Death accounts) or a valid Living Trust, you will likely have to complete this process through California Probate Court.

What does Probate of Will mean? To “probate a Will” or do a “probate of Will” or “probate estate” means that you take the Will of an estate through specific steps in a specialized California Probate Court before distributing the assets. The steps in the California probate process are clear, but the steps are also numerous—and like most legal processes, everything has to be done just right, and in just the right order.

If you are the executor of someone’s Last Will and Testament, this responsibility falls on you. You are legally required to see probate through in an honest and diligent way—or you may face liability. If at least some of the assets are within a Living Trust, make sure to start with our article on Trust Administration. For assets not in a Living Trust, and not held by a spouse, read on…

Can I Do Probate on My Own, Without an Attorney?

It’s entirely possible to complete all the steps of probate on your own, without an attorney representing you. This article is intended to get you started on the right path.

If, however, at any point you find you need help with the below process, we offer robust, comprehensive, and experienced California Probate Representation. Our attorneys and our staff can handle all the steps at very reasonable fees. Please contact us to learn more.

How Long Does Probate Take in California?

California law says that the executor of a will or other representative of the deceased must complete the probate process within one year of the day they are appointed (usually months after the date of death), or they must formally explain to the court why they cannot. In practice, however, the process often ends up taking 18-24 months, especially when courts are backed up, or if an error is made along the way.

What Are the Costs of Probate in California?

California probate fees are set by state law, and may include everything from court fees, executor’s fees, appraisal fees for properties, costs for certified copies of documents, accounting fees, legal fees, and possibly something called a “surety bond,” which is a kind of insurance we’ll explain later. If you go through an attorney, all this is likely to run between 4% to 7% of the total estate value. If you do it yourself, perhaps less, but it may consume a year or more of your own time.

If someone contests a Will, or the beneficiaries otherwise disagree with a distribution, the costs will likely be much higher, and may take years to resolve.

Do I Really Have to Go Through Probate? What If the Will Is Straightforward?

It’s a common and dangerous myth that a Will is all the legal documentation you need to claim an inheritance. In California, a “Last Will & Testament” does NOT prevent you from having to go through probate. Instead, think of a Will as a kind of letter written to a probate judge, expressing the desires of the deceased. During probate, you present the Will to a judge, and the judge decides what actually happens.

CunninghamLegal 4165 E. Thousand Oaks Blvd. Suite 145 Westlake Village, CA 91362

(805) 342-0970

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cunninghamlegal3 · 2 years

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trust attorney california

Are you a high-net-worth family whose financial, tax, and estate-planning affairs aren’t fully coordinated? Do you have financial, accounting, and legal advisors who rarely communicate with one another? Do you want to investigate innovative methods for lowering your considerable tax bill? Are you interested in creating truly multi-generational wealth?

The CunninghamLegal Family Office Practice handles these and many other critical needs of high-net-worth families—generally those with assets in excess of $10 million. Think of our Family Office as a one-stop-shop solution to financial and legal issues you may not even know you have.

Lack of Coordination Among Advisors Endangers Wealth

To explain the work of our Family Office, let’s take a look at how we might help a hypothetical family such as the Wilsons.

Frank and Wendy Wilson are in their late forties and have three children, Lucy, 25; Hal, 16; and Tom, 14. Lucy is married and has just given birth to their first grandchild, Adam.

Frank and Wendy have worked hard, made wise investments mostly in real estate, and now have assets around $30 million. The couple works with multiple CPAs and financial advisors whom they hired gradually as their wealth grew. They also have a lawyer who they consult infrequently, generally on business matters. All these people do excellent work in their own separate spheres, but don’t speak to or coordinate with one another.

High net worth brings challenges as well as advantages. The Wilsons are worried that their current advisors aren’t covering all the bases—and rightfully so. Important opportunities are falling between the cracks simply because there are so many cracks to fall between. Frank and Wendy themselves don’t have the legal and financial expertise to do the work themselves—not to mention the time, as they don’t really want to spend all day poring over spreadsheets and reading tax advisories. There’s a lot of follow-through that simply isn’t getting done.

Recently, for example, the Wilsons missed the California Prop 19 deadline to transfer key properties to their children, simply because they hadn’t been advised of the importance of this political shift to their multi-generational strategy. They also missed an RMD on a large inherited IRA, with significant tax consequences.

Then there’s the issue of their son-in-law who would like to enter the family business.

One of the best solutions to the Wilsons’ struggle to stay on top of their affairs might well be the creation of a “Family Office” at CunninghamLegal. A Family Office will provide the Wilsons with services customized to oversee and advance their financial, tax, estate, and legacy affairs with a white-glove service organized into a predictable yearly cycle.

What Precisely Does Our Family Office Do?

A Family Office at CunninghamLegal consists of a legal and tax-planning team, including a senior partner, an associate, a paralegal, and an administrative assistant—dedicated to supervising and organizing the Wilsons’ financial and legal interests, needs, and concerns. The team members employ a collaborative approach when working with the family’s other advisors. The team can be thought of as both an in-house counsel and coach.

trust attorney california

CunninghamLegal 4165 E. Thousand Oaks Blvd. Suite 145 Westlake Village, CA 91362

(805) 342-0970

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cunninghamlegal3 · 2 years

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living trust lawyer

CunninghamLegal 4165 E. Thousand Oaks Blvd. Suite 145 Westlake Village, CA 91362

(805) 342-0970

Do you need Advanced Tax Planning?

If you control over $5 million in assets, probably yes. These days controlling $5 million might just mean you own a house and have built up a nicely appreciated IRA. Indeed, you might have become “High Net-Worth” without quite realizing it—or realizing how your new status requires a whole new approach to your relationship with tax authorities.

Very wealthy families, say with assets over $50 million, have always understood the need for Advanced Tax Planning. These families have always found the best advisors and best lawyers to protect their wealth and figure out how to best pass assets on to future generations.

If you have over $50 million, it’s not hard to see the need for a complex strategy including things like a Dynasty Trust, Generation Skipping Trust (GST), Family Limited Partnership (FLP), Family Limited Liability Company (FLLC), Irrevocable Life Insurance Trust (ILIT), Grantor Retained Annuity Trust (GRAT), Private Annuity, and other structures that can protect against taxes today and on to the next generation.

Without Advanced Tax Planning, very wealthy families have always known that the government stands right outside the door, ready to take half or more of their wealth away. But some “white-shoe” planners will only work with families holding more than $50 million.

Then There’s the “Comfortably Wealthy”

“Comfortably Wealthy” families, say with assets between $10 and $49 million, may have perceived this need, but often have a surprisingly difficult time finding good tax advisors—people who really understand things like “Intentionally-Defective Irrevocable Grantor Trusts,” charitable trusts, ways to use Irrevocable Life Insurance Trusts to escape taxes, ways to sell real estate without capital gains taxes—along with clever strategies to control property taxes and save their low Proposition 13 tax caps in California.

Comfortably Wealthy families may find themselves contacted regularly by investment advisors, insurance brokers, wealth managers, and the like—but may never realize how astoundingly few of these advisors offer a deep understanding of taxation. Indeed, I’ve seen plenty of “wealth plans” that completely ignored tax consequences.

As a result, families in the $10 to $49 million range rarely make sophisticated tax decisions that look forward more than a few years. Does that mean they regularly pay tens of thousands, hundreds of thousands, or even millions in unnecessary taxes? You bet.

Truth is, if you have over $10 million in assets, you could probably be using the same strategies as billionaires to protect yourself from taxes—if you had lawyers and advisors who knew how to implement them. Many people in this category may be earning upwards of $1 million a year. If so, certain advanced tax strategies become not just possible, but urgent.

“High Net-Worth” Families Often Don’t See the Need at All

In my experience, “High Net-Worth” families, who I will define as having assets in the $5 million to $10 million range, often don’t see themselves as “wealthy” at all, rarely perceive the need for truly Advanced Tax Planning, and mostly don’t look forward more than 12 months to their next tax bill.

Sure, these otherwise savvy people understand how things like IRAs defer taxes, but too often they don’t pay enough attention, do the serious math on Roths vs. Traditional IRAs, and often overlook things like FLPs and FLLCs to pass on assets.

As a result, these “High Net-Worth” families often get totally creamed by the IRS and state governments—without ever realizing it, and simply because they don’t perceive the need to look ahead and protect themselves.

Huge Tax Changes Raise the Stakes for Everyone on the Near Horizon

Everything in this discussion has taken on a grave and urgent importance because of the new Biden administration which took office in 2021.

I’m not being political when I say that huge tax increases are coming, probably as soon as January 1, 2022. It’s simply a fact. These increases will likely hit everyone with an income over $400,000 a year, everyone who invests in the stock market, and everyone who invests in real estate—and hit them hard.

The government simply must pay for the huge stimulus packages and ballooning deficits. It will have no choice.

Along with immediate cuts to your income and assets, your ability to pass on wealth to your children will likely suffer a devastating impact. It’s highly probable that the threshold for estate taxes (the “Death Tax”) will be lowered dramatically, and the new administration has proposed the elimination of the step-up basis for asset valuation—a catastrophic change in inheritance law. Here in California, we’ve already seen Prop 19 threaten almost all Prop 13-inherited tax caps.

These possibilities are just the tip of the iceberg, and taken together they make 2021 a critical year for tax planning—probably the most critical tax-planning year of your lifetime.

Putting Together Your A-Team for 2021

You need an “A-Team” working for you this year, including attorneys with a sophisticated understanding of taxation, CPAs who can handle complex issues, and likely a good financial advisor as well. But move fast. As the year progresses, professionals will be overwhelmed. Since the election, the calls to my own firm have at least tripled.

Start by reading my article about the coming Biden tax changes and how to protect yourself. You should also take a look at our legal webinars on the subject.

What Do I Mean by Advanced Tax Planning?

What is “Advanced Tax Planning”? The phrase implies two distinct, but equally important approaches to one’s financial life.

For starters, “Advanced” means protecting against excessive taxation using sophisticated financial structures which have always been employed by very wealthy people. This means planning beyond the foundational, revocable Living Trust.

living trust lawyer

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cunninghamlegal3 · 2 years

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living trust attorney near me

You’ve worked hard to build a nest egg: cash, investments, properties, and more. But all these assets could be lost in an instant through a lawsuit—even when the lawsuit isn’t your fault.

After you’re gone, similar threats could devastate the assets you leave to your loved ones—often through no fault of their own. For example, many people, after inheriting and turning (“transmuting”) their separate property inheritance to community property, find that they lose half when the other spouse decides to divorce the person inheriting.

Let’s look at some key legal strategies you can implement now, before the threat arrives. Indeed, in general these strategies only work if put in place well in advance of trouble.

Asset Protection While You’re Alive: Private Retirement Plans

We’ll start with protecting your assets while you’re still alive.

California offers its citizens plenty of legal challenges, but we are blessed by a law which allows us to create something called a Private Retirement Plan. A California PRP is much more than a mere financial plan. It includes the creation of a Private Retirement Trust, careful retitling of assets, and a written actuarial plan—all of which must be created by professionals.

At the risk of oversimplification, using a PRP, you carefully identify certain assets as “retirement assets,” after which you are allowed to build a sturdy legal wall around them, greatly improving protection from creditors and predators of many kinds. Indeed, the purpose of the law is to protect identified assets so they can be used in retirement. You can’t quite protect all of your assets, but a savvy lawyer, working with a specialized trust administrator, can help you safeguard your key investments, properties, and more against things like lawsuits and creditors—while leaving you in control of those assets, and benefitting from them over time.

Private Retirement Plan Court-Tested, Proposition 13 Protections, Tax Advantages

PRPs have been well-tested in Federal Court: if properly structured, they have proven solid indeed. And importantly, a PRP can usually be designed to preserve Proposition 13 rights. With savvy planning, a PRP can also include a tax mitigation strategy which can enormously benefit particularly a business owner or investor.

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cunninghamlegal3 · 2 years

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living trust attorney

CunninghamLegal 4165 E. Thousand Oaks Blvd. Suite 145 Westlake Village, CA 91362

(805) 342-0970

What Does a Trustee Have to Do? Does a New Trustee Have to Go to Probate?

Let’s assume that your loved one left behind a signed Living Trust, along with a Last Will & Testament, which has been structured as a “Pour-Over Will.” If so, you should be enormously grateful. We haven’t space in this article to deal with cases in which no trust has been left behind. Just know that in most states, including California, if there’s no trust, you must go to Probate Court. Indeed, if certain classes of assets are left out of a Trust, or if minors require guardianship, you will still need to go to probate—where we strongly suggest legal representation. You can learn more about Probate Court in California here.

The job of Trustee is a weighty one, and you must either educate yourself deeply in how to administer a trust in California, or hire a firm like ours to administer the trust for you. If, for example, you have now lost both your parents and you have siblings, it will be vital to do everything in your power to be fair and equitable to every beneficiary of your parents’ estate, as well as follow the terms of the Will and Trust—and do your best to prevent friction and misunderstanding among heirs. Indeed, you may be legally liable for errors and omissions in your administration of the trust.

living trust attorney

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