Thoughtful counsel with both a tax and legal perspective

Law Office of
Jane K. Penhaligen

(925) 746-7113 jpenhaligen@jpenhaligenlaw.com
3478 Buskirk Ave., Ste. 1000
Pleasant Hill, CA 94523

• estate planning
• tax planning
• probate
• business succession planning
• asset protection
• trust administration

1.Do you own more than $100,000 worth of property requiring formal probate to pass to your heirs?

If so, then generally one needs a trust in order to avoid probate. Property which requires probate to pass to heirs is anything held in your name only which does not have beneficiaries listed. This includes real property held in one name or as tenants-in-common, stocks and bonds, and businesses. Retirement accounts and life insurance generally have beneficiaries listed and will pass without probate, but one should be sure that the appropriate beneficiaries are listed.

2.Why do I want to avoid probate?

One generally wants to avoid probate because it is expensive, time consuming and makes the transfer of your estate a matter of public record. Attorneys’ fees and executor’s fees for a probate proceeding are mandated by state law. For example, attorneys may charge 4% of the first $100,000; 3% of the next $100,000 and so on. This is generally much more than the fees charged by an attorney to administer a trust upon the passing of the creator of the trust. Additionally, probate will generally take at least a year, but can take much longer. The administration of a trust to pass property on to heir(s) generally costs less and is faster.

3.Are you married?

If so, then there may be savings to be had on estate taxes by having a trust in place before either spouse passes on. The saving can be substantial; up to $780,800 with a simple A/B Trust. It depends on the size of the estate and the estate tax exemption in effect at the time of the first death. An A/B Trust allows a couple to use both of their exemptions to estate tax. To be sure that you do not forgo the ability to save on estate taxes, one should consult an estate planning attorney if one is married to determine if a trust is recommended.

4.Do you have a “blended” family? (i.e. second marriages and/or children from previous marriages.)

If so, then a trust may be the best device to make sure that children from an earlier marriage are provided for, while at the same time making provisions for a present spouse. There are many ways to make these arrangements and an estate planning attorney should be consulted in order to determine which is best for each situation.

5. Do you want to delay transfer of control of money to heir?

If so, then specific trusts for children or other heirs that are controlled by a designated trustee for that child/heir beneficiary can prevent the beneficiary from gaining direct control for a period of years or entirely. This may be what you want in instances of beneficiaries with substance abuse problems or beneficiaries with untrustworthy spouses.