Legal Representation In San Mateo, California

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Why a trust may be a better choice than a will

Some California parents may assume that a will is sufficient for passing assets to their children, but there may be some good reasons to consider a trust. A trust is a very different instrument. While a will only takes effect on a person's death, a person may set up and control a revocable trust while still alive. An irrevocable trust is also a possibility although it offers its creator, or grantor, less control.

Many people prefer the privacy of a trust. A will has to pass through probate and is a public document as a result. Assets cannot be distributed until the probate process is over. With a trust, people can get assets immediately. However, one of the reasons parents may want to set up a trust is so they can control when beneficiaries receive assets. They may have an adult child who is still too young to receive a large lump sum and manage it responsibly. With a trust, distribution can be delayed, or it can be done in small amounts.

Fixing gaps in an existing estate plan

It's a good first step for someone in California wishing to protect assets or provide for future generations to have an estate plan in place. However, if an existing plan is not updated or being regularly reviewed, there may be gaps or instances where current wishes are not reflected. For this reason, individuals with an estate plan are often advised to be proactive about making appropriate adjustments.

One sign that estate plans may need attention is the absence of important plan components, such as an advanced medical directive or financial power of attorney. Beneficiaries need to be periodically updated as well to account for changes with family situations, such as new births or deaths. Also, if an executor is deceased or unable to carry out duties and no successor is named, the court will appoint another person, usually one of the other beneficiaries.

Who should be the executor of my estate?

Planning your estate is the responsible thing to do, and planning who will be the executor of your estate calls for extra thought.

While most people choose children, siblings or friends to execute their will, you should give thought to the qualities that make a good executor. You should also consider where your executor lives - in many cases, an out-of-state executor will need to post a probate bond to act on another person's behalf.

Preparing for taxes after death

When people in California pass away, they will often name an executor in their will. In other cases, the probate court may appoint the representative. However, death does not put an end to tax obligations. Instead, it leads to the need for a new tax assessment of the deceased's gross estate. The estate includes all the property that a person owned at the time of his or her death. There are several different types of property involved in assessing a total gross estate, including bank accounts, investments and real estate. The estate also includes lifetime gifts, overseas property, joint property with a right of survivorship and some types of community property. It can even include certain types of life insurance proceeds.

The executor of the estate will add together all a person's assets that count toward the gross estate. This amount, in addition to the adjustments available for taxable gifts made from 1977 onward, is compared to the federal estate tax exemption. If it is higher, the executor must file an IRS form 706 to report on the estate. This is true even if no taxes are necessary as transfers between spouses are generally exempt.

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Barulich Dugoni & Suttmann Law Group, Inc.
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Suite 1000
San Mateo, CA 94402-946

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