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FAQs
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What is an Advance Health Care Directive?It is a document that empowers someone else to make health care decisions for you in the event that you have lost the capacity to make those decisions yourself, due to some disability. Bear in mind that, in many states, the decision of whether or not to administer care to someone who is incapacitated automatically defaults to the physician, not the spouse…unless you have it in writing that you want someone else to have that power. Having our Firm prepare a health care proxy for you is a good way to ensure that your decisions are being implemented by someone you trust…and that your specific wishes with respect to medical intervention are spelled out in unambiguous detail.
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What is a Power Of Attorney?Power of attorney is a document that authorizes someone else to make legal decisions on your behalf in the event you are unable to make them yourself – decisions and actions such as paying bills, selling real estate, accessing bank accounts, and so on. There are several different types: Non-Durable Power of Attorney – Your designated agent is only authorized to make legal decisions for you until your disability. When disability occurs, the power of attorney terminates. Durable Power of Attorney – The legal authority is still valid after you become disabled. Springing Power of Attorney – This is a variety of durable power of attorney in which the authority to act is triggered by some future event, identified in advance, typically involving physical or mental incapacity. Bear in mind that power of attorney documents are valid when signed, kind of like a blank check. One important goal of this designation is to provide specific instructions consistent with your estate plan, so that important planning decisions you have made cannot be undone through use of power of attorney. The standard statutory Power of Attorney used by most lawyers are insufficient to protect your assets or to do estate planning if you become incapacitated. It is critical your Power of Attorney contain the necessary language to authorize all authority needed. For more details, contact us today.
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I can buy a Power of Attorney form at the office supply store for a couple of bucks. Why should I go to you?The power of attorney form you buy at a stationery store is just the basic, standard form. It does not accommodate your wishes in any detail. When our Firm prepares a power of attorney document for you, it is custom tailored to your purposes, with specific instructions for your agent with respect to a broad range of planning issues, including: the creation of trusts asset protection for your spouse before and after your death asset protection for your children from creditors or divorce prevention of business failure information about finances and distributions instructions on privacy…and more. This is a detailed legal document of the type you cannot obtain off the shelf at the local store
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What is a Will?A will is a legal document that deals specifically with the distribution of your assets after your death.
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All I need is a Will....right?Maybe. If your estate has a gross value of less than $150,000 and you do not own real property valued more than $50,000 then you can avoid probate. If your estate is valued over these thresholds then when you pass away, those things you own in your name will be frozen until the will, which “controls” how your assets gets to your family, goes through probate. Everything will be controlled by the court. It can take over a year before your assets are given to those you intended.
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What is a Trust?Here is our explanation: A trust is like the little red wagon you had when you were a child. Silly answer? Think about it… Imagine for a moment that all of your assets are boxes – your home is a box, your car is a box, your bank account is a box, and so on. You have this stack of “boxes” you’re carrying in your hands as you walk through life. If you should trip and fall (i.e. die or become disabled), what happens to the “boxes”? They fall all over the place, and you need a lawyer to help you gather them all up. If you’re alive and disabled, the “boxes” are picked up by your power of attorney. If you’re dead, they can be picked up by your executor after your heirs go to probate court. You can avoid all that with a trust. When you establish a trust, it’s like getting a little red wagon to put your “boxes” (or assets) in. They all fit inside the wagon, nice and snug. You have total control over what goes in the wagon, where it goes, etc. If you want to take it from Dean Witter over to Citigroup, that’s up to you, because it’s your wagon, and you’re the one pulling it around. And if something should happen to you, the only thing you drop is the handle. The “boxes” (your assets) are all still safely tucked inside the wagon. Now, attached to the handle of the wagon is your book of instructions. These instructions spell out in very specific terms what you want to have happen if you can no longer control your wagon full of assets. That is what a trust is – it's your book of instructions that keeps your assets together, and establishes a plan for what happens to them if you should become incapacitated or after you die.
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I am not wealthy so do I need a trust?Assuming you estate's gross value is over $150,000 then your estate will go through probate. A properly created and funded trust will avoid probate. Unlike a Will, a Living Trust's instructions are valid while you are alive. A trust is like setting up your own personal rule book so you can control everything no matter what happens in life or after you pass away. Trusts are not just for “wealthy people”, they are for people who want to be sure of how they and their families are protected now and in the future.
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Why do I need estate planning?Simply put, effective estate planning is the best way to ensure that you will be able to control your property while you’re alive and well, provide for your loved ones and yourself if you become disabled, and leave your assets when you die to whom you want, when you want, the way that you want. Every state has laws that govern what becomes of your assets if you die or become disabled. But the government also allows you to establish your own set of rules that supercede those laws, if you so choose. The process of establishing your rules is called estate planning. So, for instance, while the state may require your will to go through probate, you can choose to spare your heirs this sometimes drawn-out legal process. But you can only do it through estate planning.
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I hold joint accounts with my kids. Are they safe?No. Medi-Cal treats any asset with your name on it as yours unless you can overtly prove that the joint owner actually contributed assets to the account. To learn more about options for asset protection, contact us today.
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Can I protect assets by transferring them to my kids?No. If your children get into financial trouble, the assets become available to their creditors. If your children go through divorce, the assets may become available to their spouses through divorce settlements. If your children have health problems, the assets may be at risk, as well. In any case, by transferring your assets, you are losing control of them. For more information on asset protection options, contact us today.
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What is Probate?It is the legal process of presenting your Will to the Court, to authenticate it after your death, and appoint your Executor. Your Executor must be appointed by the Court in order to collect and distribute your assets as stated in your Will. However, because it is a legal process, there are many steps that must be followed before your Executor can be appointed. After your Executor is appointed, estate administration begins. It is a period of time the law permits the Executor to accumulate the assets and report to the Court how he/she intends to distribute them. This period usually takes a minimum of seven months after the Executor is appointed. However, in many cases, it takes a year or more. If you die without a will, the process is similar, but the State decides who gets your assets, not you. Unfortunately, probate is unpredictable. That's why many people chose to avoid it, but if all of your heirs agree and your assets are centralized, it can go smoothly. Although it may go smoothly, probate can be quite expensive. The current statutory attorney fees are as follows: Estate Value Statutory Fee $100,000 $4,000 $200,000 $7,000 $300,000 $9,000 $400,000 $11,000 $500,000 $13,000 $600,000 $15,000 $700,000 $17,000 $800,000 $19,000 $900,000 $21,000 $1,000,000 $23,000 $1,500,000 $28,000 $2,000,000 $33,000 $3,000,000 $43,000 The estate value is based on the gross value not the net value of the estate. For example if you own a home that is valued at $400,000 but the equity is only $50,000 (ie. you have a $350,000 home loan), the statutory attorney fee would be $11,000. When you factor in court fees and executor fees the total cost of probate will likely exceed $22,000. A properly created and funded trust will avoid probate.
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