Estate Planning Attorneys Santa Cruz County

A person’s estate has different meanings depending upon the context that the term “estate” is used. At the law office of Dawson, Passafuime, Bowden & Martinez, we help clients from around the Santa Cruz area understand the legal distinction between various estates and advise them on which Estate Plan would be best. Here is an overview of the various types of estates and Estate Planning:

Taxable Estates.

For Federal Estate Tax purposes, the Estate is the “Taxable Estate” which includes all the assets that person owns regardless of form of ownership (i.e. community property, joint tenancy) or which that person has “incidents” of ownership (i.e. right to change beneficiary on life insurance) at the date of death and may include gifts made during the decedent’s lifetime. In the Estate Planning context, the value of a person’s Taxable Estate” determines whether “Tax Planning” is necessary.

Probate Estate.

The term Probate Estate is used to describe the property a person owns that is subject “Probate”. If the title to the property a person owns is held in the name of a trust, in joint tenancy, or as “community property with rights of survivorship”, it is not an asset subject to Probate but if the title is held in the decedent, it is subject to Probate.

Trust Estate.

The term Trust Estate is used to describe property owned by a Trustee pursuant to a Trust Instrument or created by Court order.

Estate Planning.

Estate Planning is the art of taking a clients wishes as to how that person wishes to dispose of his or her estate, during her lifetime or on death, and incorporating them into a plan whereby the most simple, effective and least expensive Estate Planning tool is utilized. Most often, wills or trusts are the tools used by the experienced Estate Planning Attorney, but they are not the only tools available and neither may be appropriate for a given client. Accordingly, an understanding of the client, the client’s family, intended beneficiaries and property (the Estate) is essential if the right tool is to be used. As most parents most valued asset is their children, careful planning for the immediate and long term needs of their children is often the most significant part of an Estate Plan.

Is an Estate Plan Needed.

Almost everyone should have an Estate Plan to insure their Estate is administered as they wish, but there are exceptions. Generally, persons with limited beneficiaries and small estates are less likely to need an Estate Plan (Will or Trust) than persons with larger estates. The first question a reputable Estate Planning attorney should answer is whether any Estate Plan is needed.

Probate Laws.

The California laws governing wills, trusts, and the administration of Estates of incompetent or deceased persons is governed by the Probate Code. Wills are typically said to go to “Probate” which essential means that those estates must follow a described legislative process that insures the interests of creditors and beneficiaries are protected on a persons death. Where there is no Will and there are assets subject to Probate, the process is essentially the same as for administering Wills. Similarly, for incompetent persons, the Probate Code has adopted a procedure for the administration of their estates (Conservatorships) to protect their interests. Probate can be expensive as the fees for administering decedent’s estates are set by Statute and can quickly diminish the Estate as they are paid to the Executor or Administrator and the Attorney. Similarly, a Conservatorship can be very expensive. Avoidance of some or all of these fees must be considered in selecting the tool to be used (i.e. Trust versus Will) and should be discussed with a qualified Estate Planning Attorney.

Probate Avoidance.

“How do I avoid probate?” is a commonly asked question. Probate avoidance can be accomplished through correctly titling property (i.e. Joint Tenancy, Community Property with right of survivorship), or may be a result of having survivorship rights under a contract (i.e. life insurance, paid on death beneficiary on bank account) but the most commonly used Probate Avoidance tool is a Trust. Although the question most commonly asked is “How do I avoid Probate?”, the better question is “Should I avoid Probate?” An experienced Estate Planning Attorney can help you answer that question.

Taxes and Probate.

It is a commonly believed that if a person avoids Probate, they avoid taxes. That belief is simply wrong. If a person’s estate has tax issues, whether they have a Will or a Trust, the tax issues need to be considered and planned for separately. Any discussion of a person’s Estate needs to include a discussion of the applicable rules, since the tax laws change often. In 2013, the Estate and Gift Tax Exclusion was $5,000,000.00 per person and that amount will be adjusted annually for inflation. As the tax laws change often, and tax planning is very complicated. Few, if any, should do their own tax planning without reliable tax advise.

Dawson, Passafuime, Bowden & Martinez

4665 Scotts Valley Drive

Scotts Valley, CA 95066

P (831) 438-1221 F (831) 438-2812

For more information please call:

(831) 438-1221

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Scotts Valley, Santa Cruz, Aptos, Soquel, Capitola, Watsonville, Monterey, Carmel, San Jose, Santa Clara, Santa Cruz County, Santa Clara County, Monterey County, San Benito County