Learn more about what the estate planning process entails with our series of instructional videos.

Introduction to Estate Planning


Below are a series of short videos we put together to briefly describe what estate planning is, the various documents involved in a proper estate plan, and what working with an estate planning lawyer generally entails. We put these videos together because they address some of the most frequently asked questions that new clients have. Our hope is that you will gain a basic understanding of what estate planning is and learn more about why you should do it. For more information, check out our blog.

What is an Estate Plan?

One of the hardest parts about "cracking the code" is just wrapping your head around the terminology involved. Words like "estate planning" or "living trust" or "executor" or "trustee" often cause confusion and frustration. Don't worry though, for your purposes, the most important thing to know is that an estate plan is simply a set of legal documents that describe how you want to protect yourself, family, and your assets once you become disabled or after you pass away. The documents include the Advanced Health Care Directive for medical decisions, Power of Attorney for financial decisions, a Will, (usually) a Living Trust, and other documents to make sure that your assets go to the appropriate people. See the videos below for more specific information about each of these documents.

The Advance Health Care Directive and Power of Attorney


The Advance Health Care Directive and the Durable Power of Attorney are intended to protect you while you're alive but for some reason may be incapacitated and can't communicate your wishes anymore. For example, if you had a stroke. In the Advance Health Care Directive you name an agent to make medical decisions for you. It also allows you to describe things such as end-of-life decisions, instructions about relief from pain, organ donation, and what you want to have done with your body after you pass away. The Advance Health Care Directive can be helpful because it allows your family to avoid confusion and gives them peace of mind knowing that they're carrying out your wishes. The Durable Power of Attorney for financial decisions allows you to name an agent to step in and make financial decisions for you. This document can be helpful in instances where you've lost the ability to communicate competently but need someone to help you marshal your assets for you. 

The Will

The Will is probably the document that comes to mind when you hear the words "estate plan" or "estate planning." The Will describes how you want your assets, money, or other property distributed to your beneficiaries after you pass away. In addition, the Will does a couple of other important things. First, it allows you to name someone called the Executor to be in charge of managing the process of administering your estate, which includes collecting your assets, paying off debts, and making sure that your remaining property gets distributed to your beneficiaries. Second, a Will allows you to nominate guardians to care for any minor children that you may have. Wills are an essential part of every estate plan that lawyers put together.

The Revocable Living Trust

Most estate plans today involve a Revocable Living Trust. The Revocable Living Trust describes how you want your money, property, or other assets used both while you're alive and after you pass away. Whereas a Will only becomes relevant after you pass away, the Revocable Living Trust operates while you're alive. So if, for example, you become disabled and are no longer able to manage your financial affairs, the Trust would ensure that you are cared for financially. A Trust is able to do that because after you become unable to manage your affairs or after you pass away, a Trustee steps in to help you manage the Trust, whether for your benefit or for your beneficiaries' benefit. In California, one of the primary factors for using a Revocable Living Trust rather than simply a Will is to avoid a Court-supervised process known as "probate," which is very time consuming and expensive. See the videos below for further discussion on the California probate process.

How much does an estate plan cost?

Generally, there are two methods that estate planning lawyers will use when billing their clients. The first method is based on the lawyer's hourly rate, and the price depends solely on how long it takes to prepare your estate planning documents. The second method is based on a flat rate, and the price is fixed no matter how long or how little time it takes to prepare your estate planning documents. There are pros and cons to each method. The hourly rate structure allows you to pay exactly for the work that is being done. On the other hand, the uncertainty of how much work your estate plan will require may cause discomfort. The flat rate model gives you the peace of mind and certainty of knowing exactly how much the services will cost regardless of the amount of work involved, but you may end up paying more for similar services than if you had utilized a lawyer that charges by the hour. Estate plans for most clients cost a few thousand dollars with prices being higher or lower depending on the complexity of your situation. Regardless of pricing, having an estate plan in place should signficantly reduce the expenses at the time of your incapacity or death.

Working with an Estate Planning Lawyer

We find that clients are nervous to talk to an estate planning lawyer because they don't know what to expect, are worried that they will be charged immediately for the lawyer's time, and are uncomfortable discussing their own mortality. Knowing the details involved can often make the process less daunting. Usually there are three phases of working with an estate planning lawyer. In the initial meetings you will get an opportunity to learn a bit about estate planning, the lawyer you're speaking with, and share details about your family and financial situation. In the second phase, the estate planning lawyer analyzes all of the information that you've provided and begins preparing estate planning documents to carry out your wishes. He or she will then send you copies for you to review. Finally, once you've approved of the plan, you'll meet with the estate planning lawyer to have all of the documents signed and properly witnessed or notarized. After all the documents have been signed, it's usually a good idea to follow up with your estate planning lawyer once every two or three years, or after any major life events happen such as the birth of a child or the death of a family member.

Helpful Information to Collect

To get the most out of the time you spend with your estate planning lawyer, you should collect the following documents:

1. Make a list of all of your assets. Include things such as bank accounts, investment or brokerage accounts, real estate, businesses, life insurance policies, or retirement accounts. You can also list any valuable personal items such as artwork.

2. For each asset, provide an approximate market value. This information can help the estate planning lawyer guide you on what makes the most sense for your estate plan.

3. For life insurance policies or retirement accounts be sure to gather beneficiary designation forms from the institutions. Life insurance policies and retirement accounts get paid out to whoever you've named as beneficiaries on those assets, so it's important to make sure that these are updated as part of the estate planning process.

The Cost of Probate and How to Avoid It

Probate is the Court-supervised process to monitor the payment of your debts and the distribution of your property to your heirs or beneficiaries by a Court-appointed personal representative. It's a time consuming (often taking over a year to complete) and expensive process.

Probate fees are set by law. The personal representative and the lawyer are each entitled to the following amounts based on the value of the property being probated.

  • 4% of the first $100,000.
  • 3% of the next $100,000.
  • 2% of the next $800,000.
  • 1% of the next $9,000,000.
  • 0.5% of the next $15,000,000.
  • And a "reasonable amount" determined by the Court for anything above $25,000,000.

The best way to understand this is to go through an example. Let's say Jane dies with a house worth $1,000,000 that has an $800,000 mortgage on it. How much are the fees payable to the personal representative and the lawyer? The answer is up to $46,000.

How is this calculated? Let's first look at the personal representative's fee.

  • 4% of the first $100,000 is $4,000
  • 3% of the next $100,000 is $3,000
  • 2% of the next $800,000 is $16,000

This means that the personal representative is entitled to $23,000. That's not the end though because under the law, the lawyer that the personal representative hires is also entitled to the same amount, an additional $23,000 for a grand total of $46,000. The fees don't include the court filing fees and other costs and also do not account for the fact that there's an $800,000 mortgage on the property (i.e., you don't get a break even though the equity in the home is only $200,000).

How can you avoid probate? First, it's important to review the title to all of your property. Certain ways of holding your assets can help you avoid probate--common examples include using joint tenancy, community property with right of survivorship or a revocable living trust. Second, check the beneficiary designations on assets such as your life insurance policies and retirement accounts. Without having these updated, it's possible that those assets may need to be probated.

What happens if you die without a will or any other estate planning documents?

Dying without a Will or other estate planning documents is known as dying "intestate" and unless an exception applies, your assets will get distributed in accordance with the laws of "intestate succession." Intestate succession requires us to first determine whether the decedent (the person who died) was married or in a registered domestic partnership. If they were, we must first visit the concepts of community property and separate property.

Community property is the income that you earn during your marriage or registered domestic partnership and property that you bought during your marriage or partnership using your community property. It's considered owned half by you and half by your registered domestic partner or spouse. Separate property is the property that you owned prior to getting married or entering into your registered domestic partnership. It also includes property that you receive by gift or inheritance and the income from separate property, say for example, you owned certain assets before getting married, then the income from those assets would be considered your separate property.

If you die while you're married or in a registered domestic partnership all of your community property would go to your surviving spouse or your registered domestic partner. In addition, all, 1/2, or 1/3 of your
separate property would go to your surviving spouse or registered domestic partner and the rest would go to your other family depending on who survives you. For example if you had children or grandchildren, parents, sisters, brothers, nieces, nephews, or other close relatives.

If you're not married or in a registered domestic partnership at the time of your death or you're widowed, all of your property would get distributed as follows to your "heirs at law." Your "heirs at law" are essentially your closest family members. There's a specific sequence through which your family members would receive your assets that an estate planning lawyer can go over with you.

For those who don't want to be bothered with creating an estate plan, here are some things to consider: 

  1. Are there irresponsible people that would receive part of your property if you died? What if they had a drug problem or money problems? Would you want them receiving part of your assets?
  2. Are there young children that might receive some of your assets? Are they ready to manage the assets that you might leave behind?
  3. Are there charities or other organizations you want to leave money to?
  4. What if some of your beneficiaries are receiving government aid? Do you know what impact your gift to them might have on their aid?
  5. Do you have heirs who you aren't close to or maybe don't even know? Would you want them receiving part of your assets?
  6. What are the tax consequences involved if you died intestate? Have you thought about how to plan for taxes in an optimal way?

A proper estate plan can help you deal with all these contingencies.

Joint tenancy is not a good substitute for proper estate planning.

"Joint Tenancy" or "holding title as Joint Tenants" is a way of owning property among two or more people that allows the ownership to transfer to the survivor(s) when one of them passes. The main benefit of "joint tenancy" also known as "joint tenancy with right of survivorship" is that transfers of ownership at death are accomplished without having to go through probate, which is time-consuming and expensive.

Frequently misinformed parents add a child as a joint tenant to the family home as a way to avoid probate at the time of their deaths, but there are negative consequences of doing this that parents should be aware of.

  1. You lose control over the property when adding a joint tenant. Adding a joint tenant means you're giving that person an ownership interest over a portion of the property. The new joint tenant is then free to do with his or her portion, whatever he or she wants, including giving it away to someone else.
  2. Creditors of the new joint tenant that you added could potentially put a lien on your property even though all you intended to do was allow the joint tenant to have ownership of the property after you passed away.
  3. You may be making a taxable gift by adding a joint tenant to your property. When you add someone as a joint tenant, you're gifting to them of a portion of the property. Depending on your situation there may be a taxable gift as a result of your transfer of ownership of the property.

Using a revocable living trust is a good solution for this situation. It allows you to have all the benefits of being able to transfer your property to your beneficiaries at the time of your death without probate, while avoiding the negative consequences during your lifetime of using joint tenancy.