Don't Put Your Estate into the Hands of a Machine

While it may be uncomfortable to think about the possibility of one's incapacity or mortality, it is never too early to have a succession plan.  A well crafted estate plan by an Estate Planning Attorney will enable those you trust and love to avoid the delays, frustrations, and costs associated with accessing your assets because of court activity or financial institution procedural requirements.

Revocable Trusts:  

A revocable trust can be modified and terminated while the settlor (person establishing) is alive. A trust is a fiduciary arrangement that appoints another person or corporation, a trustee, to carry out the trust terms and responsibilities on behalf of the beneficiaries. Trusts avoid  the time and expense of probate and allow for a greater degree of flexibility and control over management and distribution of assets. 

Upon death, the trust allows for the immediate succession of the trust assets and provides the option of stretching out over time distributions for the beneficiaries. This is advantageous for beneficiaries with special needs, minors, or those not well suited to receive a lump sum. In addition, unlike a will which is public record once admitted to probate court, a trust provides a higher degree of privacy. 

Irrevocable Trusts:  

An irrevocable trust is a separate entity for tax purposes, with its own tax I.D.  These trusts offer asset protection and tax planning opportunities for Families, and Non-Resident Aliens.

Other Trusts

• Pet Trust (more info)
• Trust for Medi-Cal (more info)
• Charitable Remainder Trust

A standard Will is more suitable for a smaller estate, without real property, where the beneficiary will receive a lump sum distribution upon passing of the testator. A Special Needs Trust can be built into the Will if outright distribution is not desirable.

Durable Financial Powers of Attorney:  This power of attorney is delegates authority to another person to assume responsibility for managing the client's financial affairs. The DPOA can be extremely helpful in an emergency that otherwise may require Court approval to access assets.

Advanced Health Care Directives: This power of attorney designates another person to receive health care status information and advocate on the patient's behalf in the event incapacity. It also allows the patient to provide advance written instructions regarding end of life preferences.

If I am establishing a Trust, why do I also need a “Will”? The Pour Over Will is complimentary and “part and parcel” of the Trust. One of the main purposes is to act as a “catch-all” by declaring that all property not held in trust at the time of passing is deemed to be transferred and held in Trust.   

What is the Difference Between a Trustee, Executor and Guardian? The Trustee is responsible for administering (i.e. ensuring the written wishes are effectuated) the terms of the Trust. The term Trustee is exclusive to the Trust. The Executor is responsible for administering the terms of the Will. The term Executor is exclusive to the Will. The Guardian is the person you nominate to take over the parental responsibilities for your minor child(ren) in the event you pass prior to the child(ren) reaching 18. 

Does the Trustee, Executor, and Guardian have to be the Same Set of Individuals? If you have selected a Trust, the Trustee and Executor should be the same set of individuals in the same order/sequence. The Guardian often is the same as the Trustee/Executor as it is administratively more efficient (no splitting of the power of the purse v. responsibility of day-to-day care among different individuals).  

Who Should be the Successor Trustee or Executor?   While alive the settlor(s) (individual establishing the Trust) will also be the Trustee.    For the successor Trustee/Executor, the settlor(s) will often look to qualified family members. Ideally the successor Trustee/Executor will be well organized and have a good grasp of financial and/or legal matters. The successor Trustee/Executor will be able to consult an attorney or CPA if he or she requires assistance regarding the Trust or Will administration.  Nominating a relative who is a Non-U.S. citizen/resident should be avoided as it increases the administrative burdens on the Trust and will likely cause the Trust to be re-characterized as a Foreign Trust.   

What Type of Compensation is Common for the Trustee? While there is no set standard, commonly an annual fee ranging from 0.5% to 5% of asset, depending on size of assets, prorated by number of days served.  

Once Nonresident aliens become resident U.S. taxpayers all of one's worldwide assets will be subject to U.S. taxation. This can have significant ramifications. For example, pursuant to the Foreign Account Tax Compliance Act, the IRS has extraterritorial agreements with foreign financial institutions resulting in the sharing of US taxpayers financial information. Similarly, under the Report of Foreign Bank and Financial Accounts, part of the U.S. Bank Secrecy Act, U.S. taxpayers (including resident aliens) are required to report to the IRS any financial interest in foreign financial accounts.  For more information about Pre-Immigration Tax Planning solutions please contact the firm.

We provide estate planning coordination and management services for individuals who have assets and properties in multiple countries. A will or trust prepared for a California resident may not necessarily be recognized in another jurisdiction. For example, there may be forced heirship laws which supersede any writing concerning the testator's wishes. 

Other pitfalls include different tax regimes, non-recognition of legal title, creditor rights, or character of property for marital division purposes.  By coordinating in advance one can save significant time and costs and reduce the risks of any unforeseen and unintended consequences. 

Non Resident Aliens with U.S. based assets have a limited gift and estate tax exemption of $60,000 with a combined federal and state tax of 50% being imposed on any amount in excess.  Available solutions include making qualified gifts during life or restructuring ownership into a business entity that will survive its principal.