National Estate Planning Awareness Week
The third week of October is National Estate Planning Awareness Week, an awareness week founded by the National Association of Estate Planners & Councils in 2008 with the goal of helping people understand the importance of having a plan in place to protect their assets and loved ones. The Estate Planning Law Center participated this year, October 16-22, by providing short videos on our Facebook page. Bringing awareness and educating the public about estate planning is crucial to not only keeping families out of Probate Court, but also for helping manage, preserve and distribute their assets to their loved ones.
In addition to being a licensed California attorney for over 20 years, I am recognized as a legal specialist in the field of estate planning by the California State Bar. For National Estate Planning Awareness Week, I chose five popular topics to discuss: (1) the difference between a will and trust; (2) the cost of probate court; (3) specific gifts; (4) pay-on-death accounts; and (5) legacy love letters.
On Day 1, I answered the question: What is the difference between a will and a trust? The answer is that a will is a testamentary document which means it is effective upon your death. The trust is a living document which means it is effective while you're living. However, to avoid the cost of probate court, you must transfer real estate and bank accounts into your trust to protect any assets valued at over $100,000.
On Day 2, I discussed the cost of probate court. You will want to make sure that you have an estate plan in place both to avoid a conservatorship case upon your incapacity and a probate case upon your death. Court fees and attorney fees add up very quickly. A probate case usually costs $2,500 in out-of-pocket fees which includes filing fees and court costs and appraisal fees. In addition to court costs, a statutory percentage is paid to the executor and attorney for getting the job done which is calculated based on the value of the estate assets. For example, a residence valued at $300,000 generates a check to the Executor in the amount of $9,000 and a check to the Executor’s attorney in the amount of $9,000. The cost of probate court is why people are motivated to complete a trust so that their loved ones do not incur such high costs and fees in addition to the time and delay of a court procedure.
On Day 3, I explained specific gifts. A specific gift list is a list that identifies the gift item and the gift recipient. The legal requirements for creating a specific gift list are that the list must be (1) in writing; (2) signed by you; and (3) dated. You can type this specific gift list, but it must also be (1) printed, (2) signed by you; and (3) dated. Digital photos of the specific gifts are now being used in lieu of lengthy descriptions. This trend of taking photos is particularly helpful for firearms, jewelry, and art. A specific gift list directs the Executor and/or Trustee to deliver the gifts if the personal property items are still part of your estate upon your death. If the item cannot be found because you sold it; lost it; or you gifted it prior to your death, then the gift shall “lapse” which means that the gift goes away.
On Day 4, I explained P.O.D. or Pay-on-Death accounts. This is the term we use for any assets that you hold in your name only that you have named a beneficiary to be paid upon your death. Examples of Pay-on-Death accounts include annuities, retirement accounts and life insurance. Upon your death, the financial institution does not care if you have a signed will or trust, they will proceed to pay the beneficiaries that you have named. I recommend you review your accounts from time to time to make sure that you have a beneficiary listed. All Pay-on-Death accounts avoid probate but only if you have a beneficiary listed.
On Day 5, I introduced my favorite topic which is Legacy Love Letters. A Legacy Love Letter is a heartfelt final goodbye which is found and read after the passing of a loved one. A legacy love letter is more than an ordinary love letter because it has an everlasting impact. I have found that after 20 years in business assisting people with probate and trust administrations that the most important part of an estate plan is a legacy love letter.
