MY grandfather is one of the greatest men I have ever known. After fighting in the Philippines during World War II, he talked his way past guards at a U.S. Navy recruiting center and was one of only two men from his town that were accepted into the United States Navy. When he completed his tours of duty he was granted U.S. citizenship and raised five children. Working odd jobs, my grandfather taught himself math and despite never having any formal education in this country, he was able to make a living day trading stocks!
Despite all of the amazing things my grandfather was able to accomplish, one thing never made sense to him: the need to have a solid estate plan. After many years of nagging from my grandmother and the rest of our family, he finally gave in and went to an estate planning attorney and created a living trust, will, and powers of attorney. Just a few short months later, my grandfather suffered a massive stroke; a few weeks later he passed on.
That whole period was a blur of grief and sadness so avoiding probate was the last thing on any of our minds. Only after the dust settled could we appreciate how beneficial my grandparents’ proper estate planning had been. Because my grandfather had created a healthcare power of attorney, my grandmother was able to talk to his doctors and make healthcare decisions according to his wishes. Because he had executed a power of attorney for assets, my grandmother was able to access his investments to pay for hospital expenses.
Most importantly, because he had created a living trust, our family was able to avoid the long and costly process of probate. My grandfather was of that old school thinking of marriage where he held many assets in only his name. If he had not created the trust, his assets would have had to been distributed through probate.
What is probate? It is a court process where the deceased person’s assets are distributed to his or her heirs. This is a costly procedure, in both time and money. Probate fees can easily run into the tens of thousands of dollars, possibly hundreds of thousands. Since this is done under the direct management of the Probate court, your assets and family’s identities would become public record.
How do you avoid dealing with this costly procedure during a time where the family should be grieving and taking care of each other? You can create something called a living trust. The creation of a living trust results in a legal entity, separate from yourself. Your assets are placed into the trust where you remain in full control of them during your lifetime as you are the initial trustee of your trust.
If you become incapacitated, your chosen successor trustee would then manage your trust assets for you. As the trustee has considerable authority and responsibility without the supervision of the court, choosing the right trustee to act for you is important. A trusted family member is most common but it is possible to have a bank or trust company act as trustee.
At the time of your passing, the person you name as the successor trustee would then gather your assets, pay any debts, claims, and taxes, and then distribute your assets according to the instructions you have set forth in the trust, all without court supervision and fees. The trustee does have a fiduciary duty towards you and your beneficiaries; he or she cannot use your trust assets for personal gain, but must respect your wishes. You can also change or amend your trust at anytime, removing or changing trustees and beneficiaries!
With all of these benefits, why did it take so much convincing to get my grandfather to do estate planning and create a living trust? One explanation is that he thought that living trusts were only for the rich. However, anyone who owns a home needs a living trust.
Over time, we have established a strong, hardworking Filipino community and many of us own homes and other assets, necessitating the need to avoid probate. My family was lucky, as my grandfather created a living trust before he passed. Unfortunately, there are many other grandfathers out there that have not created a comprehensive estate plan. Consulting with an estate planning attorney can save your family a lot of time, money, and headaches.
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Elder Law Services of California is proud to announce that attorney Andrew Paranal has joined its trust department. Mr. Paranal began his career in estate planning in 2013 and has since expanded into asset protection and Medi-Cal planning. He became interested in Elder Law after helping care for a family member who experienced a debilitating event. Mr. Paranal is excited to join an established law firm and hopes to educate his Filipino community about the tremendous benefits of proper estate planning.
For more information, please visit elderlawcalifornia.com or call 1-800-411-0546
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Thanks for pointing out that living trusts are for anyone who owns a home. Like you grandfather, I was also under the impression that it was only something that the wealthy did. My father is getting older, and he isn’t sure how to do his estate planning, so this article will really break things down for him. Also, do you have any tips for choosing a great probate lawyer?