Our Estate Planning and Elder Law FAQs
How do I set up a trust? Does a will have to be notarized to be enforceable? Is my mother eligible for Medi-Cal? Who should I name as a guardian to my children in my will? In our FAQs, we offer answers to the most commonly-asked questions about wills, trusts, probate, and other estate planning topics.
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Does a small estate have to be probated?
In California, estates that are valued at less than $150,000 do not have to be probated. There is a Small Estate Affidavit that can used.
What’s California Probate? How much does it cost? How long does it take?
Probate is a legal proceeding that is used to wind up a person’s legal and financial affairs after death. In California probate proceedings are conducted in the Superior Court for the county where the decedent lived, and can take at least 8 months and sometimes as long as several years. The California Probate Code sets the maximum attorneys fees for a probate: 4% of the first $100,000 of the estate, 3% of the next $100,000, 2% of the next $800,000, and 1% on amounts over 1 million. It is noteworthy that the fees to the attorney are calculated on the gross fair market value of the property going through probate. Also note that the executor is entitled to the same amount of fees.
Are there assets that would not have to go through probate?
Some kind of assets transfer automatically at the death of an owner with no probate or trust administration required. The most common kinds of such assets are:
- Joint Tenancy; Tenancy by the Entirety; or Community Property With Right of Survivorship
- Beneficiary Designations – retirement accounts and life insurance policies have named beneficiaries.
- Payable on Death Accounts/Transfer on Death Accounts
What’s California Trust Administration?
After someone passes away who had a trust, trust administration must be completed by the Successor Trustee named in the trust. There is much to do. Generally a Successor Trustee will carry out his or her duties with the help of an experienced estate planning attorney.
Even though there are many duties for the Successor Trustee to carry out (e.g. notice to beneficiaries, manage assets, file tax returns, pay off creditors, etc.), trust administration is less expensive (usually 1/5th the cost of probate) and easier than Probate.
What is Medi-Cal?
Medi-Cal is a combined Federal and California State program designed to help people pay the costs of long term nursing care for public assistance recipients and other low income persons. It’s a needs-based program and those who seek it must pass certain eligibility requirements. To qualify, you must demonstrate that you have limited resources available.
Must an applicant spend his or her resources down to $2,000?
An applicant can have no more than $2,000 of “countable” resources in their name. An asset is not “countable” if it is “exempt” or “unavailable.” There are many assets, your home being the most important, that are exempt. An “unavailable” asset is one that is not exempt, but for one reason or another, cannot be liquidated or readily accessed at the time of the application. An example might be a time-share that would be difficult to sell. If married, the at-home spouse will be able to keep at least an additional $120,900 (2017) above and beyond any exempt or unavailable property as a Community Spouse Resource Allowance (“CSRA”). In many cases the CSRA can be raised further, sometimes substantially further. We can advise you whether or not you would qualify and explain how this is done.
After the death of the Medi-Cal beneficiary, will Medi-Cal take family assets to pay for the Medi-Cal benefits received?
Medi-Cal can demand to be reimbursed for all benefits paid after the Medi-Cal beneficiary’s death. This could include forcing the sale of the family home. However, there are several significant exceptions and methods to avoid this. Medi-Cal will delay recovery during the life of a surviving spouse. Most importantly, Medi-Cal can only recover against property that is in the estate of the Medi-Cal recipient (or surviving spouse) at the time of their death. There are planning tools we have that can assure that there is little or no property that will be considered to be in the Medi-Cal recipient’s estate, therefore, no recovery. There are technical pitfalls and significant tax impacts if this is not done correctly – so please give us a call!
What planning needs to be done in considering Medi-Cal?
In developing a comprehensive Medi-Cal plan there are three important areas to consider:
- Eligibility Planning: First, we must get you qualified for Med-Cal.
- Income Planning: Once qualified, we plan on reducing or eliminating your “share of cost” copayment. While Medi-Cal pays for a part of your care costs, you may pay the other part. With proper planning, we may be able to reduce your portion of those costs.
- Asset Protection: Next we implement a plan to protect assets from Medi-Cal estate recovery (Medi-Cal Asset Protection Trust).
Should I consider a special needs trust?
As with any type of trust, a special needs trust is created when someone identifies property to be managed by someone else for the benefit of named beneficiaries. In the case of a special needs trust, the beneficiary usually has a disability that makes the beneficiary unable to manage his own money independently.
If you would like to provide financial assistance to someone with special needs, then a trust may be a useful legal tool for achieving your goal.
Benefits of a Special Needs Trust
While each situation is unique, the following are some potential benefits of a special needs trust:
- A special needs trust may allow the beneficiary to continue benefiting from government assistance programs. If the beneficiary qualifies for Medicaid, Supplemental Security Income (SSI), or other government benefits that are based on income, then the beneficiary may still continue to qualify for those benefits even if a special needs trust is established. It is the trustee, not the beneficiary, who has control over the trust assets. Therefore, the assets will not be considered for government assistance program eligibility. However, if you were to make a gift outright or leave a direct bequest in your will, then the beneficiary would own the property outright, and the recipient might be ruled ineligible for government assistance programs.
- Someone else is in charge of the money. The trustee will make decisions about how the assets of the trust are invested and dispersed to the beneficiary.
- You can decide how and when the beneficiary benefits from the trust. The terms of the trust, for example, could require that the trust money be used for necessities, for recreation, for medical care, or for a combination of things.
It can be scary to think about what will happen to your loved one with special needs after you are gone. It is essential to be prepared, to think about all possible contingencies, and to continue to help your loved one for a long time to come.
As with any type of trust, it is important to talk to an experienced estate planning lawyer before deciding whether or not to set up a special needs trust. Please contact us today via this website or by phone to schedule a free, confidential, no-obligation consultation about your unique needs.
How long does it take to settle a trust?
The answer to your question depends on the complexity of the trust assets, whether any creditors have claims on the trust assets, the tax implications of settling the trust, and whether any of the beneficiaries contest the proposed settlement. A simple trust settlement could take as little as a few months, while other trust settlements may take significantly longer.
Factors That Make Some Trust Settlements Take Longer
A trust may take longer to settle if:
- There are many assets. Every asset must be located and valued before a settlement occurs.
- Assets are hard to value. Trustees have a fiduciary duty to the beneficiaries of the trust. This means that they need to get a reasonable value for each asset. This can take some time in a poor economy or if there is no ready market for a specific asset.
- A beneficiary cannot be located. All named beneficiaries should be informed of the trust before a settlement is reached.
- A family member or beneficiary is contesting the validity of the trust. This may occur if the person was not informed of an estate plan and believed it to be something other than what existed at the time of the decedent’s death. Sometimes, if children or grandchildren are treated differently or if significant assets are left to charity, then a dispute may arise.
- Creditors claim a right to the trust property. Some creditors, such as the IRS and hospitals, may claim a right to the trust assets to satisfy existing debts.
Any of these factors can stretch the settlement of the trust out by months or years, depending on the unique issue.
How an Attorney Can Help a Trust Settle Fairly and Quickly
If you are a trustee or a trust beneficiary and you believe that the trust is not being settled quickly enough, then you should consult with a lawyer. You may be able to go to court to force action to settle the estate, but there are pros and cons to this that should be thoroughly explored with an attorney before you do anything. Your goal may be a quick settlement of the trust, but that shouldn’t come at the expense of a fair settlement of the trust.
To learn more about your rights and for help settling a trust, please contact us today via this website or by phone to schedule a free and confidential consultation.