Phone: 510-548-9944


Dragon Archer Group, P.C.

Juliette Topacio Sarmiento

Attorney At Law

An Overview Of Estate Planning

The Legal Facts Of Life



ESTATE PLANNING : how you have arranged to transfer your real estate and personal property and provide for your loved ones after you die.


DECEDENT : the dearly departed


LAST WILL & TESTAMENT : the document which specifies who gets your property when you dies.


TESTATOR : You, the maker of a Last Will & Testament.


EXECUTOR : an adult whom you name in your will to be responsible for supervising your estate after you die and seeing to it that your expressed desires are carried out.


PERSONAL GUARDIAN: an adult whom you name to be responsible for raising them if both you and your spouse die or the surviving spouse can't or won't accept responsibility for them.


TESTATE : to die leaving a will or other living trust


INTESTATE : to die without any will or living trust


PROBATE : the name for the court-supervised legal process for paying your debts and distributing your property left by will. If there is no will or living trust, probate occurs under the "intestacy" provisions of state law.


DEATH TAXES : taxes imposed on the decedent's property. The federal government calls them "estate taxes." Some states call them "inheritance taxes." California has effectively no death or inheritance taxes.


REAL PROPERTY : real estate--the land and the buildings on it


PERSONAL PROPERTY : every other kind of property, such as bank accounts, stocks, cash, furniture, jewelry, clothing, your pet


LIVING TRUST: a legal document that is revocable and avoids probate, which you make while living, which privately transfers your property at the time of your death, directly to the people or organizations you desires. It only becomes operational upon your death. But during your lifetime, you, the maker, effectively own all property transferred in trust and can do with it whatever you want until death.


GRANTOR/TRUSTEE : You, the maker of the Living Trust, and who has full control and management of the property transferred in trust until your death.


SUCCESSOR TRUSTEE : the adult whom you appoint to handle the trust after your death, and to see to it that your expressed desires are carried out.


BENEFICIARY : The recipient of your property named in your living trust and/or will.


GIFT : property you transfer freely (not by sale or trade) to a person or institution (including property you give away during your lifetime, and at your death, depending on the context)


DURABLE POWER OF ATTORNEY FOR HEALTH CARE DECISIONS : a legal document which you set up in advance for what you want done regarding life support systems in case you become incapacitated and unable to express your own desires; it is effective until your death.


DURABLE POWER OF ATTORNEY FOR FINANCES : a legal document which you set up in advance for someone to manage your financial affairs if you become incapacitated, and is effective until your death.


PRINCIPAL : You, the maker of a Durable Power of Attorney


ATTORNEY-IN-FACT : the adult you appoint to act in your place to carry out your wishes in Durable Powers of Attorney for financial and health care decisions





All property you own, minus anything you owe (assets minus liabilities). Its value is often termed your "net worth." It also includes the following:


THE TAXABLE ESTATE : The property subject to federal estate taxes (and any state taxes) when you die. It's the same as the value of your estate, or net worth, except that certain property included in your estate is excluded from the taxable estate. For example, for federal tax purposes, property left to a surviving spouse or to charity is excluded from the taxable estate.


THE PROBATE ESTATE : The portion of your estate that must undergo probate before it can be distributed to your beneficiaries. Most property left by will must go through probate. Everything transferred by probate-avoiding methods, such as living trusts, is NOT part of the probate estate. For those who plan wisely, the "probate estate" will be considerably less than the taxable estate, and some people are able to eliminate it entirely.





Probate proceedings are generally mere formalities, since disputes about a will are rare. But probate is usually cumbersome and lengthy. In probate, the decedent's assets are ascertained, all debts and death taxes are paid, fees for lawyers, appraisers, accountants and court filing fees are paid, before the remaining property is finally distributed to the beneficiaries.


The average probate lasts a year to 17 months before the estate is actually distributed.


Although probate doesn't involve evil or corrupt officials, it is a very technical area of the law, which requires tedious, routine paperwork, which can seem very complicated to the uninitiated. Consequently, probate attorneys charge high fees for their services.


The wiser approach is to plan to avoid probate altogether. This can be done for most estates. The primary method is by Living Trust, which avoids court proceedings and transfers property quickly after a death.




Creating a living trust can be a marvelous gift to your family.


It will save them time, money and untold hassles after your death. With a living trust, your heirs don't face the delay or cost of probate court proceedings, and the transfer of assets is private, not a matter of public record. The successor trustee simply transfers ownership to the beneficiaries you named in the trust. In many cases, the whole process takes only a few weeks, and there are no legal or court fees to pay.


Setting up a living trust requires some paperwork, because you must transfer ownership of your property to the trust. For example, if you want to leave your house through the trust, you must sign a new deed, showing that you now own the house as trustee of your living trust. This paperwork can be tedious, but it is not difficult.


The benefit of this paperwork is that by acting in your capacity as trustee, you show that you are firmly in control of your affairs, are mentally competent and not under someone else's influence. This prevents any successful lawsuit from any disgruntled family member, to challenge your living trust on the basis of your incompetence or your being under the undue influence of some other person.




Everyone should make out a will, even those planning to transfer all their property by living trust. A will:


transfers property inadvertently overlooked when making a living trust;


transfers property unexpectedly acquired after the living trust is made;


appoint an executor for the estate; and


nominates personal and back-up financial guardians for minor children




Some people confuse living trusts with tax-saving schemes. Unfortunately, avoiding probate does not have any effect on, or reduce, death taxes.


In theory, the beneficiary of a decedent's property is taxed rather than the property itself. But in reality, the taxes are paid out of the decedent's estate. Two factors determine whether or not your estate will be required to pay death taxes:


1. the value of your taxable estate, and


2. the laws of the state where you live


If your estate's net worth is less than $600,000.00, and if you have not made large gifts during your lifetime, you will not be liable for federal taxes.


If your estate is larger than this amount, it will normally owe federal tax.


However, certain types of gifts are exempt from federal estate tax, such as gifts to spouses and many gifts to charity.


If you are married and the total combined estate belonging to you and your spouse is over $600,000, you will want to consider tax planning if each spouse plans to leave most of his or her property to the other. If you do not, the estate of the surviving spouse will result in a value of over $600,000 and be subject to a hefty tax.


There are limited ways to reduce or avoid federal estate taxes, such as making gifts while you are alive, leaving property to your spouse or charity, creating certain types of trusts, especially marital estate trusts (between husband and wife), and transferring ownership of life insurance on your life.




Whatever way you choose to transfer your property, you must name an Executor for your will and/or a successor trustee of your living trust who will be responsible for supervising your estate after you die and seeing to it that your expressed desires are carried out. Since many people use both a living trust and a will, they name the same person in each capacity.




If you have minor children, you will want to plan ahead for what will happen if you and the other parent (if there is one) die before your children become legal adults (age 18 in California), namely:


Naming the "Personal Guardian." While your nomination is not automatically legally binding, courts normally confirm the person you name if the other parent is not available;


Determining how much property you want to leave for your minor children, and who will supervise it. There are different legal methods to leave property to your minor children, including establishing a children's trust, which allows you to delay the age your child received his/her inheritance outright until an age you establish. This is important because many parents worry that age 18 is far too young for the responsibility of handling money and property.




A very important consideration of estate planning is to provide ready cash (called "liquidity") to pay debts, taxes, hospitalization, funeral and burial expenses, your family's living expenses, and sometimes also to take care of other beneficiaries of your estate.


If most of your property is to be transferred by will, your family will not get it until probate is completed. Limited amounts for family necessities can normally be obtained by petitioning the probate court, but it is wiser to plan to have sources of money available that will not require going to court.


If most of your property will be transferred outside of probate, as with a living trust, there is usually less reason to worry about arranging for ready cash, since property in a living trust can often be transferred to inheritors in a few days.


However, if most of your assets are not "liquid" (cannot easily be converted to money), you may still need to provide a source of ready cash.


A life insurance policy payable to a survivor or survivors is one traditional means of providing ready cash. Money held in a joint bank account can often be released immediately, or in a few days, if you plan it properly. Also, most banks offer informal trust accounts (often called "Pay-On-Death" accounts) which can be used to promptly provide the cash in the account to named beneficiaries free of probate. An advantage of this type of account is that the person named as an account beneficiary cannot take any money from the account before the depositor dies.




Thorough estate planning includes considering what happens if you become incapacitated and are unable to make medical or financial decisions for yourself. The Durable Power of Attorney for Health Care Decisions and the Durable Power of Attorney for Financial Matters allow you to appoint whoever you want to have the authority to act for you if you become incapacitated.


You (the "Principal") put in whatever conditions and limitations you want on the powers you grant the person you appoint to act for you (the "Attorney-in-Fact"). You can retain all control over your affairs unless and until incapacity occurs. These documents are reasonably short. You don't need to transfer title of your assets. You can revoke them at any time, unless you become incapacitated. No court review or approval is needed. They don't have to be filed or recorded with any governmental agency.


The Durable Power of Attorney for Health Care Decisions gives you a choice of three options to express your desires:


1. require the use of life support systems, or


2. prohibit the use of life support systems to artificially prolong life when you have been diagnosed as "incurably ill" or having a "terminal condition," or


3. delegate the decision regarding use of life support equipment to your attorney-in-fact.




There are a number of possibilities to consider, such as U.S. armed forces veterans benefit providing for burial in a national cemetery; services offered by commercial funeral homes; services offered through no-profit funeral societies; cremation; and donation of body parts to organ banks for medical transplants.



Do I Need A Will?




A Last Will and Testament (“WILL”) is a way of ensuring that your property goes to certain people or organizations when you pass away. It also can be part of your overall “Estate Plan.” With a Will, you can name:


Your Beneficiaries. The family members, friends or organizations that will inherit your “estate.” Your estate is made up of furniture, jewelry, stocks, bank accounts, cars, a business, real estate or anything else that you own.


A Guardian. This person will take care of your children in case you and your spouse pass away when your children are minors. The Guardian will raise your children and manage their money.


An Executor. This person or institution collects your property, pays your debts and any taxes that are due, and then makes sure that the rest of your estate is given to your beneficiaries.




No. Some property is not covered by a Will. These include:


Life Insurance. Money from your life insurance policy goes to the people you name as beneficiaries on the policy – no matter who is listed as an heir in your Will.


Retirement Plans. Money from your retirement plan goes to the person(s) you name as beneficiaries in the plan.


Property owned as a joint tenant. If you own real estate, cars, bank accounts and other property with another person as joint tenants your co-owner will inherit your share.


Living Trust. All property you place in a Living Trust during your lifetime goes to the Trust’s beneficiary. A Living Trust is a way of managing your funds and investments during your lifetime and transferring them to a beneficiary after your death.


Your Spouse’s half of Community Property. In California, any money, California real estate, and possessions that you and your spouse acquire during your marriage are called “Community Property.” You and your spouse own equal shares of this property, no matter who earns the most. So, your Will can include only your half of the community property, not your spouse’s.


Possessions and property that either spouse brought into the marriage - plus gifts and inheritances given to just one spouse during the marriage – are called Separate Property.


Even if your entire estate consists of a life insurance policy, a retirement plan and joint tenancies, you still should consider making a Will. For example, if you win a lottery or inherit jewelry from a friend, your Will would cover such unexpected additions to your estate.





 If you die without a Will, California State laws determine who gets your estate. If you are married, your spouse receives all your Community Property. Part of your Separate Property goes to your spouse, and part goes to your children or grandchildren, parents, siblings, nieces, nephews, or other close relatives.


If you are not married, your estate goes to your children or grandchildren, if you have any – or to your parents, siblings, nieces, nephews or other close relatives.


If you have no living relatives, the State of California gets everything you own. People who are not relatives won’t inherit anything if you pass away without a Will. So, your friends, former spouse or favorite charity won’t get a thing. Also, a surviving partner of an unmarried couple does not inherit anything.




No. Making a Will is not away to avoid “Probate” – the court procedure that changes the legal ownership of your property after you pass away.


Your Will is filed with the County Court after you pass away. The court’s probate department makes sure it is your last valid Will, appoints the Executor named in your Will, and supervises the Executor’s work. If someone challenges your Will, a probate judge decides if that person should inherit any of your property.


Your estate avoids probate only if:


You left your entire estate to your spouse, or

Your estate is worth no more than $60,000.00 after your spouse’s share is paid, or

Your property is held in joint tenancy with another person, or is all payable to a named beneficiary (such as the beneficiary listed on your life insurance policy), or

During your lifetime, you put everything you own into a Living Trust, so that you own no more than $60,000.00 in your name at the time of your death.




In California, you can make a Will in one of three (3) ways:


Holographic Will: Must be completely handwritten, signed and dated by you. Your handwriting must be legible, and the Will must explain clearly what you are leaving to whom. Remember, your family, friends and a probate judge must be able to understand your exact wishes. This type of Will need not be notarized or witnessed.

Even so, having the Will signed by witnesses is a good idea. Since probate laws are very specific, it is good to have an attorney check the Will to be sure that everything is done correctly.


Fill-in-the Form Will: This kind of Will is designed for single, married, and divorced people with modest estates. It will help you leave your estate to your children or spouse, and lets you give money to one other person or charity, and you can name a Guardian and Executor.


Will prepared by an Attorney: An attorney can help you to understand the many ways that you can leave your property to beneficiaries. An attorney can also help you develop a complete Estate Plan and explain the tax consequences. This kind of planning can save time and money for your heirs.


To ensure the authenticity of this kind of Will, at least two (2) people who will not inherit from you must see you sign a typed or printed Will, and they must sign your Will, too.


No matter what kind of will you decide to have, keep in mind that you and your spouse should each have separate Wills.




Yes. In fact, if your Will isn’t up-t-date when you die, important people in your life may not be provided for.


You may change your Will through a “Codicil,” a legal paper that becomes an addition to your Will, or by writing a new Will. Do not change your Will by crossing things out and writing or typing changes on it, as doing so does not legally change your will.


A Codicil can be used to make fairly simple changes, such as naming a different Executor or naming a different beneficiary. Codicils must be written and witnessed in the same ways that Wills are.


You should think about making an entirely new Will when:


• you marry or divorce (once you divorce, your ex-spouse will not get any of your estate unless you say so in a new Will);

• there is a birth or death in your family;

• your property greatly increases or decreases in value; or

• the person you name as Guardian or Executor moves away, or passes away.


Also, if you move to another State, check with a lawyer there to see if your California Will is still valid.




Besides the attorney who writes your Will, no one needs to know about your Will. But your Executor and other close friends or relatives should know that you have a Will. And, whether you keep the Will in a safe deposit box, your lawyer’s safe, or a fireproof box at home, they should now where to find your Will when you pass away. Also, if you add a Codicil to your Will, be sure to store it with your Will.




Property that you leave to your spouse is not subject to federal estate tax, ands your remaining estate will not be taxed if it is worth less than $60,000.00.




You can do several things now to help your Executor and family later on:


Property List. Make a list of your property and where it can be found. Name your bank accounts, safety deposit boxes, stocks and bonds, real estate and other possessions. Also write down the names and addresses of your creditors – the people and companies to whom you own money.


Instructions for Burial /Cremation/Organ Donation. Let your heirs know in writing how you want if you want to be buried, cremated, or if you want to donate organs to a hospital. Also tell them where you wish to be buried, or how you wish your cremains to be disposed of. Be sure to tell your Executor and family about these papers and where you keep them.


Life Support Preferences. Someday you may be seriously ill and unable to let your family and doctors know what kind of medical treatment you would like. For example, if you were in a coma, would you want doctors to use life support systems to keep you alive?


In California, you can use a legal form, called a “DURABLE POWER OF ATTORNEY FOR HEALTH CARE DECISIONS” to name a friend or relative to make medical decisions for you, if you are ever unable to do so yourself. Once completed, the person you named and your doctor must follow your wishes.


For more information about Wills and Estate Planning, contact Dragon Archer Group, P.C.


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