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I’m a TV star! - Well on cable TV |
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June 15, 2009
Dear Clients and Colleagues,
I’m a TV star! Well, cable TV, and only west of the 405 and north of
the 101. Last month we began advertising on Time Warner Cable TV.
You can find the commercial on our website at
http://www.HornsteinLawOffices.com A colleague saw it and commented that
before he saw my commercial, he had thought that having a Will meant
that his Estate would not go through Probate, and that a Trust was
only for wealthy people. That’s not true. So, let me talk about some
Estate, Will, and Trust basics.
What Is an Estate? An Estate is simply everything you have
accumulated during your life, from your house, to your investments,
to your personal possessions like your car and your clothing,
anything that you have not already transferred into your Living
Trust. When you pass away, your “Will,” if you have one, will govern
what happens to your Estate. If you don’t have one, the State has
one for you in the California Probate Code.
What Is Estate Planning? It is arranging to have everything you own,
whether it be in your Estate or your Living Trust, pass to your
heirs or beneficiaries of your choice as easily and inexpensively
and with as little legal and bureaucratic delays as possible.
What Is a Will? A Will is a basic legal document that tells your
family and friends what you want done with your possessions,
everything from your stocks and bonds, to your home, to your
Baseball Card or Beanie Baby collection. It also can specify who
will be the guardian of your minor children. In your Will you also
appoint someone to carry out your wishes, usually a family member or
close friend. This person is called an Executor.
If your house is worth more than $20,000 or everything else you own
is worth more than $100,000, California will require that your Will
be probated, that is, go through a thorough judicial review through
a Court Probate proceeding.
What Is Probate? After you pass on, your executor hires a lawyer to
file the Will with the Superior Court. The judge decides if your
Will is legal and proper, and instructs the Executor in how and when
to distribute your property, hopefully, in accordance with your
instructions in the Will. Not only must creditors be notified of the
Probate proceeding, but the date of the hearing must be published in
a newspaper to be sure that all creditors and interested persons
have an opportunity to learn of the hearing. The Court wants to be
sure that creditors have an opportunity to request that they be paid
any debts that they may be owed by your Estate.
Even with a properly drafted Will, during this process the judge
“controls” the disposition of the property. Nothing can be given to
your heirs without the judge’s permission. In California, the
process typically takes anywhere from one month to two years to
complete.
How much does Probate cost? The State of California decides.
California is a “statutory state,” which means that the State
Legislature sets a fee schedule for the attorney and the executor of
a probated will. Currently, the schedule provides that the fee is 4%
of the first $100,000 in gross value of property, 3% of the next
$100,000, 2% of the next $800,000, and a sliding scale starting at
1% of the amount over $1 million of gross value.
For example, if you leave your house valued at $400,000 to your
children they will pay $4,000 for the first $100,000, $3,000 for the
second $100,000, and $4,000 for the next $200,000, for a total of
$11,000 to the attorney and an additional $11,000 to the executor of
your Will. They will also have to pay costs such as court filing
fees, fees to the newspaper to publish the date of the hearing, and
a bond fee (insurance) if the Court requires it. These additional
costs may be in the hundreds or even thousands of dollars. Your
executor may choose to waive his or her fee if also a beneficiary. I
wouldn’t count on your attorney waiving his or her fee because it is
a lot of work. The Court may even allow for extraordinary fees on
top of the statutory fee if the attorney can show that additional
work was required for which additional compensation is appropriate.
But wait, it gets worse. If you have an outstanding mortgage of
$200,000 on the house, your children still pay fees based on the
$400,000 value of the house, not the $200,000 equity you had in the
house. If your house and investments are worth $800,000, the
statutory fees alone are $38,000, that is, 19,000 to the attorney
and $19,000 to the executor!
If some long lost former husband or wife or anyone else learns of
the probate of the Will in the newspaper, he or she can show up at
the hearing with an attorney to challenge the Will and try to claim
a share. And then the real fun begins.
How can I avoid having to go through Probate and all of the extra
cost and bureaucracy this entails? If you do not want your children
to go through this, the best alternative is to plan ahead with a
Revocable Living Trust. It is much less expensive, as it does not
have to go through a Court process to settle the Trust and
distribute assets to beneficiaries, thereby avoiding thousands of
dollars in Probate Fees. Also, the process can be private, as no
public notice through publication in a newspaper is required.
But a Trust must be expensive. No, a typical Revocable Living Trust
for a couple at Hornstein Law Offices generally costs approximately
$1,850, plus notary and recording fees (to record with the county
recorder deeds of real property, your house, for example, to your
Trust).
In my next newsletter I will discuss the basics of setting up a
Revocable Living Trust.
If you already have a Trust, but know someone who does not, please
contact my assistant, Evan Press, at 818.887.9401 or by Email at
evan@hornsteinlawoffices.com
In fact, if you have any questions about your estate, tax or
financial situation, please contact us. Also, if you know someone
who could benefit from our services, for example, a friend or family
member who has yet to do any estate planning or your son or
daughter, who should start saving for retirement, please contact us.
We would love an introduction.
We are a full-service financial firm, with experts in estate
planning, taxes and financial strategy, and offer a free initial
consultation.
Thank you,
Steve Hornstein
We are a full-service financial firm, with experts in estate
planning, taxes and investments.
Steve H. Hornstein, CPA, Esq., LL.M., CFP™
Hornstein Financial
20335 Ventura Blvd., Suite 203
Woodland Hills, CA 91364
Office: (818) 887-9401
Fax: (818) 887-7173
Toll-free: (888) 280-8100
www.hornsteinfinancial.com |
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