California Estate Planning
The Law Office of Patrick D. O’Neil provides comprehensive estate planning services tailored to each client’s specific needs. Despite a general reduced need to prepare an estate plan for tax planning purposes, retaining an estate planning attorney in California is still a critical step in protecting your assets.
It is true that most people no longer need an estate plan for tax planning purposes with the individual exemption at a gobsmacking $11,200,000 and married couples getting twice that. However, if you have not entered the multimillionaire stratosphere (yet!), there are still important reasons to have an estate plan. The main reasons to prepare an estate plan are to avoid the mandatory fees provided for in the California probate process and the protection of the disposition of your assets – you choose who will benefit from your estate and what they will receive.
California’s Statutory Probate Fees
Pursuant to California Probate Code Section 10810, the attorney assisting the personal representative in the probate of an estate “shall receive” compensation for ordinary services as follows based on the gross value of the estate accounted for by the personal representative.
- 4% on the first $100,000
- 3% on the next $100,000
- 2% on the next $800,000
- 1% on the next $9,000,000
- .5% on the next $15,000,000
- A reasonable amount determined by the court for amounts above of $25,000,000
Two takeaways from this code section: (1) ordinary services are just that. If any issues arise during the probate process (usually 18-24 months) that requires extraordinary effort by the attorney, the attorney can be due a larger fee beyond the statutory scheme. The mandatory fee structure should be thought of as providing a basement and not a ceiling for fees from probating an estate; and (2) anyone that owns real estate should place the property in a trust to avoid the mandatory fees. An estate consisting of just a house valued at approximately the California median home price (~$600,000) would be subject to $15,000 in attorney’s fees. This would be the case even if the value of the home was encumbered by a $500,000 mortgage – it is the value of the gross estate.
Protection For Your Assets
Protecting your assets is a multi-faceted concept. Setting up a sophisticated estate plan can shield your assets from creditors and lawsuits or future divorcing spouses. A comprehensive estate plan that’s uniquely tailored to you, your family and your assets also protects your family by alleviating a lot of the burden and responsibility that falls on surviving family members upon your passing.
Common questions that may arise: what if my child divorces? Will my child-in-law receive part of my estate? What if my spouse remarries? Will my child be cut out of a trust as a beneficiary?
A good plan will leave no doubt as to how your assets should be distributed and avoid probate court (which is open to the public in addition to the cost).