1611 S. Pacific Coast Hwy., Suite 103
Redondo Beach, California 90277
Ph | 310.540.6877
Fx | 310.540.7794
[client services]
Hofer & Harris provides the following services:
- Living/revocable trusts
- Wills
- Powers of attorney for financial management
- Advance health care directives
- Trusts for minors
- Educational trusts
- Incentive/asset protection trusts
- Special needs trusts
- Companion animal trusts
- Charitable trusts
- Asset transfers
- Wealth transfer planning
- Asset protection planning
- Estate and gift tax planning
- Family business succession planning
- Medi-Cal planning
- Elder law and incapacity planning
- Trust and estate administration
- Probate administration
- Estate/gift tax return consultation/preparation
Estate Planning
Estate planning involves preparing for the orderly administration and distribution of a person's estate, usually at the person's physical/mental incapacity or death. A well-drafted estate plan can minimize uncertainty, transfer costs, taxes, lack of privacy, time of post-death administration, and most importantly ensure that the person's estate reaches the intended recipients. Effective estate planning also anticipates problems that intended recipients of an estate may encounter, such as a recipient's incapacity or inability to properly manage his or her finances.
In addition to its inherent technical complexity, the art of estate planning involves understanding human nature so as to spot potential issues that the client may not immediately realize, manage risk, and problem-solve based on experience and intuition. A self-help estate planning program or service, no matter how touted, can rarely take the place of an experienced and intuitive estate attorney who can help the client spot potential problem issues and plan accordingly. The time and energy one invests in planning is usually directly proportional to the ease and minimized expenses of settling the estate after the owner's death. Excellent planning will also institute provisions that tend to promote cooperation and peace among the decedent's heirs. As nature abhors a vacuum, family dynamics tend to shift dramatically and often unexpectedly at the death of a key family figure. Proper planning can minimize the negative impact of such an event.
Estate Administration
Typically after an estate plan is in place, the owner's estate may require an administration triggered by certain events. During an owner's lifetime, those triggering events may include opportune times to pass wealth to the next generation so as to minimize transfer taxes.
Other triggering events during an owner's lifetime may include the owner's declining health or capacity to manage his or her own finances. When an owner lacks the ability to manage his or her own assets and otherwise make financial decisions, the law requires that a manager be appointed to manage and distribute the incapacitated owner's assets and make financial decisions for the owner's benefit. If the owner has not personally made such an appointment in writing (known as a power of attorney) the government will act to protect the incapacitated owner by supervising the appointment and administration of the owner's assets for the owner's benefit (known as a guardianship or conservatorship). Most people who plan for their incapacity prefer to avoid the time, expense, and lack of choice inherent in such government oversight by setting up a durable power of attorney for financial affairs and for health care. In a power of attorney, the owner designates an agent to manage the owner's finances or make health care decisions when the owner is unable to do so. Such powers of attorney terminate at the principal's death.
At the owner's death, the estate will need to be settled and distributed to the owner's heirs, regardless of whether the administration occurs in a private trust administration or a public probate administration. The post-death administration process includes providing proper statutory notice to heirs, settling creditor claims, collecting and valuing assets for tax and accounting purposes, filing tax returns, clearing the title of assets, applying for exemptions to avoid real property tax reassessments, properly managing and distributing assets in compliance with fiduciary law and other miscellaneous tasks as the case may be.
The default process of an estate administration in California in estates valued at over $100,000 involves a probate administration which is a court-supervised settling of an estate. A probate administration can usually be avoided by proactively planning to pass assets through a private trust, thereby minimizing attorney and personal representative fees associated with court filings and appearances. In addition, court filings are a public record and can be accessed by anyone with enough interest or curiosity. Last, because the wheels of government grind slowly, exacerbated by inherent inefficiencies of a bureaucracy tasked with supervising numerous estate administrations, lack of funding and budget cuts, a probate administration typically lasts much longer than a private trust administration (in terms of distributing the bulk of the estate to the heirs). On the other hand, despite the disadvantages of a probate administration, the upside is that it often provides heirs and personal representatives a great deal of protection and peace of mind in instances when contention among heirs, lurking creditors, and murky estate planning give rise to uncertainty. In some instances it may be advantageous to plan for an estate to pass through a probate administration.
Question: Why does the law require such cumbersome and often expensive procedures to pass property to a decedent's heirs? Why can't the process be simple?
Answer: A cynical and less-informed response would be that attorneys and the government have rigged the system to their own advantage to make money off of the public at large. At least that is what many self-help guides and services proclaim. Although there may be an occasional element of truth in such pronouncements (especially in the realm of taxes), the reality is that the procedural hoops of passing an estate to a decedent's heirs provide the heirs with certainty, a clean title, and protect potential aggrieved parties (e.g., creditors, heirs who are fraudulently or unintentionally disinherited). The goal should be to strike a balance between the protective function of established procedure versus ease of alienability. Certainty of ownership builds confidence, promotes investment, and ultimately creates a peaceful, stable society wherein its citizens can pursue those things that REALLY matter (i.e., fulfilling relationships, education, art, science, and spirituality).
Typical Estate Plan
Administrations and Associated Fees
The majority of estate plans involve setting up a living trust with a pour-over will, a power of attorney for assets and a power of attorney for health care (in California known as an advance health care directive). When setting up a trust, the process also involves funding the trust by executing instruments (i.e., deeds, stock transfers, assignments, etc.) that transfer real property and personal property to the trust, as well as counsel on how to manage the estate thereafter.
It is not uncommon to plan for the care of a person with a disability (Medi-Cal planning or special needs trust), care for minors and adults who lack ability, maturity or incentive, or even care for a companion animal via a pet trust. A specific financial and care plan can be put into place in almost any situation by way of proper planning.
Attorney fees for estate planning are negotiated at a flat rate or hourly rate, typically at the client's preference. The cost of setting up an estate plan varies based upon complexity.
Attorney fees in a probate procedure are statutory and a court must approve extraordinary attorney fees. This means that all probate attorneys will charge the estate roughly the same amount for the same administration. You will want to select a probate attorney who is responsive to you and acts swiftly to keep the probate administration moving along.
Attorney fees in a private trust administration will depend entirely on the amount of work required to settle the estate and can be negotiated at an hourly rate or flat fee at the clients preference.
Please contact this office to schedule a free initial consultation.