Estate Planning
Everyone should have an estate plan to pass more on to your beneficiaries and avoid the oftentimes unjust consequences of the probate system. For example:

  • Elvis Presley left a $10.2 million estate. However, his probate court costs were $7.2 million leaving only 28% of his estate for his heirs.
  • Marilyn Monroe, who left an estate over $1 million, which took 18 years to probate, leaving just $101,000 for her heirs after lawyers and others took their fees.
  • J. Paul Getty’s estate has paid over $40 million in probate costs to lawyers and others.
  • Penny pincher John D. Rockefeller’s probate expenses cost 64% of his huge estate.

We know this because probate proceedings are generally public records whereas trust agreements are generally private records. Generally, for the years 2007 and 2008, estates will be taxed at 45% for every dollar over $2,000,000. An estate plan allows you to maximize your estate tax exclusion, allowing up to $4,000,000 passing to your heirs without an estate tax.

Even if you fit into the vast majority of people that do not have the assets to trigger the estate tax as it is now, an estate plan is still important. Beginning January 1, 2011, the estate tax exemption will be approximately $1,000,000. Your estate may be susceptible to an estate tax just by owing real property or a large life insurance policy.

Further more, an estate plan helps avoid the costly probate process. Property owned by the “estate” and must remain so until the probate process is complete and the judge says it may be distributed. Recently the AARP did a national survey and found that the average probate costs were between 2 and 10 percent of the decedent’s estate. Probate is a process whereby your heirs have to “prove the will” or marshal assets and distribute them to those who are entitled to inherit them while being reviewed or monitored by a judge or other court appointed person. Generally, in probate, the process has three processes:

  1. Discover what personal property and real estate is owned by the deceased person;
  2. Pay an tax or debts that the deceased person may owe; and
  3. Distribute all real and personal property that remains to the rightful beneficiaries

A proper estate plan can minimize or even eliminate probate costs, attorneys’ fees and court costs. Furthermore, an estate plan gives you better control over the distribution of your estate and total flexibility to change or revoke the trust. Additionally, an estate plan is settled almost immediately whereas in California, the minimum time an estate will be open is probably six months to a year. It can be significantly longer if the estate requires real property such as a home to be sold and the buyer to close escrow. If someone challenges the will or paternity, the probate process can take years to complete.

An estate plan should also eliminate any conservatorship proceedings during your life. Thus, if you become incapacitated and your spouse needs to sell real property, he or she will not need to institute and complete a conservatorship proceeding before he or she can sign for the incapacitated spouse.
If you or someone close to you has recently married or divorced, recently acquired wealth, became new parents, bought a new home in their names and not the name of a trust, or are retirees without an estate plan, you can talk to an attorney at McCullogh & Associates and get a free consultation.

NOTICE: McCullogh & Associates has provided the contents of this page for general informational purposes only. You should not substitute this information for personal consultation with a qualified professional in the field, nor should you rely upon this information in taking any action. No attorney-client relationship will be created through your use of this letter or its web site.