Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

September 7, 2012
How do we keep an estate out of probate?

Q: What is the very basic information needed in a Trust and Will so they won't go into probate court? We have a will and a trust (a large binder full of extraneous legalese that was done for us 15 years ago for $1,750). I don't want to throw away anything until I know exactly what I should keep. I just want to simplify everything for our two sons. Our lawyer was of no help. Thanks. -- June, Cameron Park, CA

A: Remember that if you have a will with no accompanying revocable living trust, your estate will go through probate. It's the addition of the living trust that keeps an estate out of probate. And even with a perfectly crafted trust agreement, unless your assets are actually titled in the name of the trust, those assets may still need to go through probate.

At its most basic, a revocable living trust requires the following: (1) a settlor or trustor (the person who creates the trust); (2) intent to create the trust; (3) trust property; (4) a valid, legal purpose; and (5) at least one beneficiary.

When you create a living trust, you should also create a will to cover any assets that you have not funded into your trust. If you have minor children, you nominate guardians for them in your will.

In California, the requirements for a will vary depending on the type that you execute. One of the simplest options is the statutory Will form, which is authorized by the Probate Code. The testator (the person making the Will) fills in the blanks with his or her wishes, and then follows the signing instructions at the beginning of the Will. Other options include holographic (handwritten) Wills, and the standard written Will that most people are familiar with. With limited exceptions, the Will must be signed and dated and, unless entirely in the handwriting of the testator, witnessed by two witnesses, to be valid.

You mentioned that your documents are 15 years old. When I meet with clients whose documents are that old, there are usually important improvements to be made due to the passage of time and changes in the law. Often, major changes are required to the named beneficiaries, successor trustees, or other key provisions. Tax laws often change, which can lead to structural changes in your trust planning.

If you don't feel that your attorney helped you understand your documents and how to use them, I suggest you find a different attorney, one whom you trust.

I would strongly caution you against attempting to draft your own updated will or trust. If you have both a will and a trust, the documents need to be properly coordinated in order to work as intended. If there are inconsistencies between the documents or the provisions within either document, then your executor or trustee could end up in court to sort everything out.

Even if you meet the bare legal requirements for a will or trust, the documents could still be challenged in court by the beneficiaries, especially if there are questions about their validity. If the trust is insufficient and fails, then your estate may be subject to probate. A skilled estate planning attorney will prepare documents that are much less likely to be successfully challenged in court.

Your concerns about cost and the "extraneous legalese" in your documents are common ones. Although your trust may seem long, that language is there to protect you and your wishes.

The trust document acts as a guide for your trustee on how you want your estate handled. Many of the provisions are included to make estate or trust administration process easier for your trustee and to protect the interests of your beneficiaries.

Estate planning is truly an investment, and a properly done plan can save your executor, trustee, and beneficiaries both time and money during the administration process. Good luck!

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at cbuck@sacbee.com

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.



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