Frequently Asked Questions

Estate Planning:

  1. What is Estate planning? 
    A process by which an individual designs a strategy and executes a will, trust agreement, Power of Attorney and Advanced Directive and other documents to provide for the administration and distribution of his or her assets upon his or her incapacity or death.  Tax planning is an essential consideration and part of this process.
     

  2. What happens if I die without a Will?
    If you die without a Will, what you own (your “assets”) in your name alone will be divided among your spouse, domestic partner, children, or other relatives according to state law. The court will appoint a relative to collect and distribute your assets.
     

  3. What can a Will do for me?
    In a Will you may designate who will receive your assets at your death. You may designate someone (called an “executor”) to appear before the court, collect your assets, pay your debts and taxes, and distribute your assets as you specify. You may nominate someone (called a “guardian”) to raise your children who are under age 18. You may designate someone (called a “custodian”) to manage assets for your children until they reach any age from 18 to 25.
     

  4. Does a Will avoid probate?
    No. With or without a Will, assets in your name alone usually go through the court probate process. The court’s first job is to determine if your Will is valid. 
     

  5. What is community property?
    Can I give away my share in my Will? If you are married and you or your spouse earned money during your marriage from work and wages, that money (and the assets bought with it) is community property. Your Will can only give away your one-half of community property. Your Will cannot give away your spouse’s one-half of community property.
     

  6. Does my Will give away all of my assets? Do all assets go through probate?
    No. Money in a joint tenancy bank account automatically belongs to the other named owner without probate. If your spouse, domestic partner, or child is on the deed to your house as a joint tenant, the house automatically passes to him or her. Life insurance and retirement plan benefits may pass directly to the named beneficiary. A Will does not necessarily control how these types of “nonprobate” assets pass at your death.
     

  7. Where should I keep my Will?
    After you and the witnesses sign the Will, keep your Will in your safe deposit box or other safe place. You should tell trusted family members where your Will is kept.
     

  8. When should I change my Will?
    You should make and sign a new Will if you marry, divorce, or terminate your domestic partnership after you sign this Will. Divorce, annulment, or termination of a domestic partnership automatically cancels all property stated to pass to a former husband, wife, or domestic partner under this Will, and revokes the designation of a former spouse or domestic partner as executor, custodian, or guardian. You should sign a new Will when you have more children, or if your spouse or a child dies, or a domestic partner dies or marries. You may want to change your Will if there is a large change in the value of your assets. You may also want to change your Will if you enter a domestic partnership or your domestic partnership has been terminated after you sign this Will.
     

  9. What is an executor?
    An “executor” is the person you name to collect your assets, pay your debts and taxes, and distribute your assets as the court directs. It may be a person or it may be a qualified bank or trust company.
     

  10. Should I require a bond?
    You may require that an executor post a “bond.” A bond is a form of insurance to replace assets that may be mismanaged or stolen by the executor. The cost of the bond is paid from the estate’s assets. 16. What is a guardian? Do I need to designate one? If you have children under age 18, you should designate a guardian of their “persons” to raise them.
     

  11. What is a custodian? Do I need to designate one?
    A “custodian” is a person you may designate to manage assets for someone (including a child) who is under the age of 25 and who receives assets under your Will. The custodian manages the assets and pays as much as the custodian determines is proper for health, support, maintenance, and education. The custodian delivers what is left to the person when the person reaches the age you choose (from 18 to 25). No bond is required of a custodian. 18. Should I ask people if they are willing to serve before I designate them as executor, guardian, or custodian? Probably yes. Some people and banks and trust companies may not consent to serve or may not be qualified to act.
     

  12. What is a trust?
    There are many kinds of trusts, including trusts created by Wills (called “testamentary trusts”) and trusts created during your lifetime (called “revocable living trusts”). Both kinds of trusts are long-term arrangements in which a manager (called a “trustee”) invests and manages assets for someone (called a “beneficiary”) on the terms you specify. Trusts are too complicated to be used in most Statutory Forms. You should see a lawyer if you want to create a trust.
     

  13. Do I still need a will if I set up a living trust?
    Yes. A will deals with any property that was not included in the living trust. This property may have been left out for any number of reasons. For example, property that wasn't properly transferred into the trust will be distributed under your will. Property you bought or received after the trust was created will be distributed according to your will, unless you transfer the property to, or purchase it in the name of, the trust.
    A will also lets you name a guardian for your minor children and covers property intentionally left out of the trust (e.g., cars, personal checking accounts). A trust from us includes a simple pour-over will for this purpose.
     

  14. When should you update a living trust? 
    You should consider amending your living trust if, for example: You get married or divorced; You have, or adopt, a child; You move to another state; Your financial status changes significantly; One of your trust beneficiaries dies; One of your named trustees dies or is incapacitated; You start or buy a business, You purchase an asset you would like to be in your trust.
     

  15. Who Owns Trust Property?
    When you put your property into a trust, the trustee of that trust owns the property - you are no longer the legal owner of the transferred property. This doesn't mean you have no control of your assets. Since you will probably be your trust's initial trustee, you will still be in charge of your property. You can do whatever you want with it - you can leave it alone, take it out of the trust, or use it as you had been before the trust was created. A living trust is an easy way to organize your assets and manage them as a single unit.
     

  16. Does a trust help me avoid probate? 
    Yes. upon one’s death a will must always be probated or “proven valid.” A living trustee, however, is a separate legal entity than the person who passed away and assets placed in the trust are not subject to probate when the creator dies. As a result, the directions contained in the trust can be carried out without delay in most cases.
     

  17. Is my trust agreement private?
    Yes. Unlike the terms of a will which become a matter of public record, the terms of a trust agreement remain private.

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Legal disclaimer: Jala Eaton is a California attorney. As such, her posts, courses, and post responses to posted inquiries, such as the ones above, are limited to her understanding of law in the jurisdiction in which she practices and not to any other jurisdiction. In addition, no response to any posted inquiry should be deemed to constitute legal, financial, or investment advice, nor to constitute the existence of an attorney/client or other contractual or fiduciary relationship. On My Own Financial and On My Own Academy is not an investment firm and does not offer investment advice. 

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