Invariably after meeting someone new and getting into a discussion about what I do, I receive this question: “How much does a Will cost?” This is one of the most frequent questions our firm fields and also one of the most challenging to answer. Let’s start with this fact – a Will is NOT a commodity and the process of creating an estate plan should not be the same as picking up a gallon of milk at the supermarket.

So how much does it cost? There are inexpensive Will-drafting software packages for sale in office supply stores (e.g., Office Depot, Staples for about $50), there are relatively inexpensive online Will drafting services (e.g. Suze Orman and Legalzoom kits for about $100) and finally there are many general practice lawyers who will be happy to fill in some form documents and churn out a run-of-the-mill, bare bones, basic estate plan for around $800-$1000. This last group is likely the most dangerous because while you may think that one lawyer is trained the same as another, the reality is that if you broke your arm you wouldn’t go see an ophthalmologist. Even though they’re both doctors, I like you, would rather see the orthopedic specialist than the eye doctor. The same theory applies to your estate plan. You do not want a lawyer who practices mostly in personal injury or criminal law to draft a Will or Trust for you. Yes, we may all be lawyers and legally qualified to practice law, but really how much faith are you going to have in an estate plan written by a lawyer between his appearance at a slip and fall hearing and writing a letter to get someone’s mortgage refinanced. When it’s your family, don’t you want to know that when that cast comes off, the arm will be fixed?

As one of America’s greatest satirist once wrote, “I’ve never met a lawyer who couldn’t write a will.” The fact is that many lawyers will gladly accept your fee and draft a fill-in-the-blanks Will or Trust for you; however, the discount fee you paid ($750, $1000, $1500?) will likely leave you with a worthless stack of papers that you just wasted that $1,000 on. This is why Chhokar Law Group, P.C. is an exclusively estate planning and asset protection firm.

The trouble with all of these fill-in-the-blanks Wills and Trusts is that if you have any special circumstances in your life whatsoever or need any professional guidance, they fail when you need them to work. There are several protections that many families need in place ranging from special needs, divorce/remarriage protections, asset distribution protections (no children should receive a large sum of money via inheritance at 18 because taking that year off to “find themselves” before starting school, just becomes a real possibility). Without a professional estate planning attorney you can be assured that those protections will be absent from your plan. In short, it won’t work!

Another major problem with these options is that there is little to no legal counseling to help you make the best decisions to accomplish your individual goals and objectives. There is nobody there to counsel you when a loved one passes away and you need the estate administered. There is no one to turn to ask the questions about how the assets should change title or what IRS documents you need to have prepared. In fact the attorney who drafted the fill-in-the-blanks Will or Trust will probably charge you for each and every minute of his or her time (billable hours are done in increments of 6 minutes). At Chhokar Law Group, P.C. we never charge an hourly fee for anything, all of your questions are encouraged and welcomed.

An estate plan needs to be a living breathing thing that gets reevaluated periodically and regularly as your life’s circumstances change to ensure that it is still accomplishing what you want, protecting what’s most important to you and doesn’t become a worthless pile of paper. We practice estate planning very differently from most of the other attorneys around here. We enjoy developing meaningful, lifetime relationships with our clients and provide them an exceptional level of personalized service and professional counseling, all in a relaxed and friendly way.

We aren’t the cheapest, nor the most expensive estate planning firm in town. In these economic times there is great temptation to try to save money by shopping around for the best deal. But in the end, you often get what you pay for. We can accept credit card payments, set up payment plans and help make it as affordable as possible. It’s important for us that you know it is far more critical to us that our clients have a plan in place than to leave their families and their estates exposed; the method of payment takes a back seat to protecting our client’s families. We have no desire to be the Walmart of Wills. We have no desire to mass-produce shoddy documents at discounted prices without caring about whether that is really what our clients need. Again you’re planning for life to protect your loved ones and your estate, you’re not shopping for milk.

We will never be the shop you stop in at to pickup a Will on the way home from work. On the other hand, we will be the place you stop to let us know that you’re worried about your daughter’s boyfriend, and you just don’t know, but you’d like to make sure that if you’re not around that she’ll still be protected. We have developed an extensive professional network of financial advisors, bankers and insurance professionals to be able to work as a team to ensure that our clients are taken care of in all facets of their finances.

If this sounds like the sort of legal service you want, please call 858-384-5757 or email us at info@yourtotalesateplan.com.

Your car requires regular servicing in order to maintain its performance and reliability…and so does your estate plan.  Remember all those pamphlets that were sitting in your glove box along with an owners manual you never read, one of them was a recommended schedule for maintenance based on how many miles you drove your car.  At certain times or a specific number of miles, you need to change the oil, replace the brake pads, rotate the tires and so on.  With your car you know if you keep driving it without servicing it, it’s a sure bet your car will let you down (inevitably while it’s raining).  Well, your estate plan is no different.  You may not want to service it  (we all know taking you car in is a pain), but like your car your estate plan is sure to let you down if you do not service it (when your estate plan lets you down, you won’t care if it’s raining).

Your estate plan needs “servicing” or “updating” if it is going to perform the way you want when you need it.  Your estate plan is a snapshot of you, your family, your assets and the tax laws in effect at the time it was created. All of these change over time, thus your plan should change accordingly.  It is unreasonable to expect the simple will and trust written when you were a newlywed to be what you need it to be that you have a growing family, divorced from your former spouse or retired.  In the simplest terms, you cannot draft an estate plan one time to cover your family for all time.  Over the course of your lifetime, your estate plan will need check-ups, maintenance, tweaking and even full revision or replacement (the legal term is “restatement”).  However, if you have the right attorney to do this for you, the servicing will cost you a minimal amount as compared to having to redo a defective plan or far worse having to administer a plan that did not work in the first place.  (Yes that’s right, not only is probate court slow, painful and public, but also it can easily cost you many times over what it would cost to set up a basic living trust plan).

So, how do you know when it’s time to update or service your plan?  The simplest way is to think of it like servicing your car but instead of having more standard mileage checkpoints, your estate plan has event checkpoints.  Generally, any change in your personal, family, financial or health situation will prompt the need for a change.  Additionally any change in the tax laws could prompt a change in your estate plan, which is precisely why you need to be in continuous communication with your attorney!

It’s a good idea to review your estate plan every year.  Set aside a specific time every year (the week after you birthday or anniversary, any month without too many events, two weeks after tax season … you get the idea) to review it.  At Chhokar Law Group, P.C. we do that for you by reviewing your assets every year and restating your trust every two years to make sure no plan is left without “service” resulting in a breakdown of the plan when it’s needed most.

Here are some suggested check-points to alert you when your plan needs “servicing:”

• Marriage, divorce or separation;

• You or your spouse’s health declines;

• Your spouse dies;

• Value of assets changes dramatically;

• Change in business interests;

• You buy real estate;

• Birth or adoption;

• Finances change;

• Parent or relative becomes dependent on you;

• Minor becomes adult;

• Family member dies;

• Federal or state tax laws change;

• You plan to move to a different state;

• Your successor trustee, guardian or administrator moves, becomes ill or resigns; and/or,

• You change your mind – you are the creator of your living trust and can change it

whenever you want.

Remember, as convenient as it would be, you cannot buy a car, never have it serviced and expect it to run like new in ten to fifteen years.  Same with your estate plan, you cannot have it drafted once and then never look at it again expecting it to work exactly how you want when you pass away years down the road.

The vast majority of people don’t even start thinking about planning their estates until they reach retirement age.  If that’s your plan then you’re making at least two mistakes:

1. (1) You are gambling that nothing will go wrong until you’re ready to plan; and
2. (2) You are severely limiting what you can accomplish with your estate planning.

We all know that we will eventually die but understandably it’s an uncomfortable subject for all but the most morbid among us.  The problem is that having the “I know it’s something I should do but I’m still young and I don’t want to think about it right now” or “I know I need it, but I don’t have time right now so I’ll just wait until next year” philosophies will leave you family in a world of pain after you’re gone.  Emotionally for all of the obvious reasons, but also financially and legally because of the probate procedures that anyone without a well executed estate plan has to go through.

Life rarely happens exactly as most people anticipate: people have children without getting married, people get divorced, they marry more than once, then again, they may never marry or have children.  Real life is full of options, choices and twists of fate.  In short, it’s life.

You have to be prepared for the unknown and provide for your loved ones who depend on you in case you’re not around.  Every time we leave our homes and get in our cars, we are at risk of being in a car accident.  Sorry, but that’s the reality.  The point is that nobody is immune from the unknown or unplanned; accidents can happen to anyone and you have to be prepared for those unknown eventualities.  So how do you plan for the unknown?  Well there’s always insurance - every insurance agent on the planet will tell you to buy their insurance to plan for the unknown.

Here’s the rub, insurance, in and of itself is limited.  My auto insurance isn’t going to do a thing for me when the next big earthquake hit’s California causing a Giant Redwood Tree to lose a gargantuan branch.  This branch will then hurtle to earth at astronomical speeds and land perfectly on the little toe on my left foot causing much pain and a trip to the emergency room. After reviewing my auto insurance policy, I will unfortunately confirm that I’m out of luck getting my insurance company to pay for an “act of God” never mind that I wasn’t in my car at the time of the incident.

Remember … life happens and no one can predict it. This is one of the reasons why estate planning is the best and most inexpensive long term insurance coverage that you can ever buy.  We can’t plan for everything specifically, but we can have a solid plan for every eventuality.  For example, if that tree hit my toe and I was in such unbelievable pain that I couldn’t communicate (as would likely be the case because I have a child like tolerance for pain), the person I’ve selected as my Health Care Agent could tell the doctors what to do about my toe!  Excellent, that’s one less worry keeping me up at night.  What would I have done without my little toe?  Which little piggy would have gone “wee, wee, wee all the way home?”  Thank goodness for estate planning.

We take precautions to try and extend our lives for as long as possible. We make sure our cars are in working order.  We eat healthier foods, exercise, and have regular checkups.  And as a result of certain global events we have all become more aware of our surroundings and any threats to our security.  There are no guarantees in life, but we are doing the best we can.

The key issue then becomes: what if that is not enough?  What if you don’t make it to the end of the “normal” road of life?  What would happen to your loved ones if you died today?  Will there be enough money to provide for them the way you would want?  Will they even be able to get to the assets you leave behind or will your assets be tied up in courts, held ransom by the painfully slow probate process that can take up to 12-16 months or more (keeping in mind your assets are tied up in the probate court this entire time)?  How much will they really get (probate in CA can cost up to 5% of the entire value of your estate)?

Wouldn’t it be better to make sure that the people you care about will be taken care of the way you want no matter what happens during your life?  Of course it would.

You could gamble and wait until the last possible minute to plan your estate.  You could be like those people who make estate-planning decisions from their deathbeds in the hospital.  But do you really want to be making some of the most important decisions of your life that will affect your family’s future, potentially for generations, in that kind of condition?  Wouldn’t it be better to put a plan in place now and then have the rest of your life to think about it, polish and fine tune it until it’s exactly what you want?  Remember, estate planning is a process and not an event; you can always make changes to your plan whenever you want.  Frankly having any plan in place is better than having no plan in place.

Planning your estate now doesn’t mean you will die tomorrow, just as buying life insurance doesn’t mean you’re getting ready to die nor does buying homeowner’s insurance mean your house will burn down tomorrow.  So if you act now, you won’t have to worry about what could happen to your family if your life doesn’t follow the normal progression…or about making bad decisions at the last second when you’ve run out of time.

It’s called peace of mind…and you can have it and you certainly deserve it.  So, when’s the best time to plan your estate? Now!

Living trusts enable you to control the distribution of your estate.  Furthermore, certain trusts may enable you to reduce or avoid many of the taxes and fees that may be imposed upon your death.

In short, a trust is a legal arrangement under which one person, the trustee, controls property given by another person, the trustor, for the benefit of a third person, the beneficiary.  The fun part is that when you establish a revocable living trust, you are allowed to be the trustor, the trustee, and the beneficiary of that trust.  Simply you get to play all the parts in the play.

When you set up a living trust, you transfer ownership of all the assets you’d like to place in the trust from yourself to the trust. Think of it as if you took all your possessions and put them into a box. Legally, you no longer own any of the assets in your trust. Instead, your trust now owns your assets. But, as the trustee, you maintain complete control. You can buy or sell assets as you see fit. You can even give assets away. Effectively, you can have all the same control over your assets as you did before you put them into trust.  So you may ask: “what’s the point of setting up a trust?”  Well keep reading.

Upon your death, assuming that you have transferred all your assets to the revocable trust, there isn’t anything to probate because the assets are held in the trust. Therefore, properly established and funded living trusts completely avoid probate.  So, you get to skip a lot of the fees and costs associated with probate.  Also, by establishing a living trust you also get to avoid the 12 to 16 months that probate requires.  This is a huge benefit.  Effectively, if you use a living trust, your estate will be available to your heirs upon your death, without any of the delays or expensive court proceedings that accompany the probate process.

There are some trust strategies that serve very specific estate needs. One of the most widely used is a living trust with an A-B provision. An A-B trust enables you to pass on up to double the “exemption amount” to your heirs free of estate taxes.  The exemption amount is the amount of money that Uncle Sam allows you to pass on without him taxing it.

When an A-B trust is implemented, two subsequent trusts are created upon the death of the first spouse. The assets will be allocated between the survivor’s trust, or “A” trust, and the decedent’s trust, or “B” trust.  Sometimes these are referred to as the Marital Trust and Family Trust.  Don’t worry about naming protocols.  Let’s just stick with A and B for now.

This will create two taxable entities, each of which will be entitled to use a personal exemption.

The surviving spouse retains full control of his or her trust. He or she can also receive income from the deceased spouse’s trust and can even withdraw principal from it when necessary for health, education or maintenance.

On the death of the second spouse, the assets of both trusts pass directly to the heirs, completely avoiding probate. If each of these trusts contains less than the exemption amount, these assets will pass to the heirs free of federal estate taxes.

Sound like a good deal.  Well for most people it makes a lot of sense to establish a trust. I’ll be covering some of the other benefits of these types of trusts in later posting, including asset protection benefits.  But, if you need more information right now, you can always go to www.yourtotalestateplan.com.