The Essential Objectives of Estate Planning

The Objective of Estate Planning

The essential objectives of estate planning are:

Probate Fees

“Probate fees” are the attorney’s and executor’s fees allowed by law in a court-supervised administration of an estate.  One objective of estate planning is to eliminate or at least reduce probate fees by creating a revocable living trust.  All titled assets held by the trust may be distributed to your desired beneficiaries without the need of a probate.

Federal Estate Tax

If you are married and have a substantial combined net worth, be sure to take advantage of “portability.”  This is the addition of the first spouse to die’s unused lifetime exclusion amount to the surviving spouse’s lifetime exclusion amount.  To obtain portability present law requires the filing of a federal estate tax return following the death of the first spouse to die.

In this connection, consider making annual $15,000 gifts of cash or property value to family members or your favorite San Diego charity.  This will not require your filing of any gift tax return, reducing the size of your estate, therefore enabling your estate to pay less federal estate tax.

Also, the purchase of life insurance on your life may help to pay any federal estate tax owing on your death.


When a Medi-Cal recipient dies in California, the state may make an “estate recovery claim” for repayment of certain health care services received by the decedent and paid for by Medi-Cal.  Proper estate planning can protect certain assets from a potential recovery claim.  Since January 1, 2017, only certain assets are exempt from such a claim, including real property held by a trust, joint tenancy, survivorship and life estate.  In addition, consider purchasing long-term health care insurance to reduce the potential of Medi-Cal costs.


Estate planning may also help minimize the risk from a damage award against you (for example, from auto accident liability in excess of your coverage).  One thing you can do here is purchase an umbrella liability insurance policy through the insurance company providing your auto or home insurance policies.


Most importantly, the objective of estate planning is to ensure your estate will pass to the beneficiaries you desire.  You can do so by designating them in a trust and/or will or other appropriate dispository document(s).

The above statements are generalizations only and are not to be taken as legal advice for the reader’s particular situation.

Differences Between a Will and a Trust in San Diego

People often ask about the differences between a will and a trust.  This is a good question because both these documents are used to designate who receives your assets when you die.

The essential difference is that a will becomes effective when the person who signed the will (testator) dies.  A trust, on the other hand, becomes effective when the person who created the trust (trustor) signs a trust agreement or declaration of trust.

With respect to a trust, you must formally transfer into it all the titled assets you intend to become part of the trust.  Titled assets have their legal ownership reflected by title documents, such as a deed to real property or financial account statements.

Generally, for a will to be valid in California, it requires that the testator sign the will in front of two witnesses, who then sign the will themselves.  A trust needs to be signed by the trustor, and preferably before a notary public.

The primary reason to use a trust instead of a will is to avoid an expensive and lengthy court administration (probate) of one’s estate following death.  If an estate passing under a will contains real property and/or other property exceeding a certain value, it must be probated.  Assets passing under a trust, however, do not require a probate.  Here, the successor trustee is to make the dispositions of the  assets called for by the terms of the trust.

Ironically, even when you create a trust as your primary estate planning document, you should still create what is called a “pour over” will.  The main purpose of this type of will is to direct that any titled assets which you failed to transfer into your trust are to pass after your death to your trust, to be distributed in accordance with the trust’s terms.  However, a pour over will may still require a probate if the titled assets exceed a certain monetary value.

As you can see, both a will and a trust serve a purpose in an estate plan, and we are here to help prepare what is best for your needs.

The above statements are generalizations only and are not to be taken as legal advice for the reader’s particular situation.


Administering Your Trust Upon Your Death

You may wonder what is involved when your successor trustee administers your revocable living trust following your death. Here are the primary actions (not necessarily sequential) your successor trustee will need to take:

1. Arrange for the on-going care of your pets; secure your home; and make the final arrangements for the disposition of your body.

2. Order several Death Certificates through the mortuary to be used in connection with closing financial accounts and transferring title to real property.

3. Mail out “Notice to Beneficiary/Heir” letters as required by California law.

4. Obtain preliminary value of your estate to determine whether a federal estate tax return may need to be filed with the IRS (within nine (9) months from the date of your death).

5. Open a new checking account in the trust name (or convert an existing account). This account will be used to pay all of your debts and on-going trust expenses. In this connection, obtain from the IRS a new income tax reporting number (EIN) for the trust which the bank will require, since your trust became irrevocable upon your death.

6. Transfer title to all financial/brokerage accounts from your name into the successor trustee’s name, or close (sell the assets in) all or some of such accounts and transfer the proceeds into the new account in the trust referred to in Para. 5 above.

7. Locate all outstanding bills and pay same from the account referred to in Para 5. above.

8. Make claim for any death benefit(s) payable on your death.

9. As to any personal property in your estate, have an appraisal of such property made by an estate personal property appraiser, and sell such property and deposit the sale proceeds into the trust bank account, or divide such property among the entitled beneficiaries based on value or as otherwise required by the terms of your trust.

10. Obtain date of death values of all other property in your estate. Your banks and brokerage firms can provide the trustee with a statement(s) covering the time of your death and/or a letter providing the date of death value(s) of such account(s). The trustee will probably need to hire a qualified real estate appraiser to value your real property(ies) (needed for income tax basis purposes).

11. The trustee should keep a good record of all trust income and expenses and trust distributions, since an accounting should typically be provided to each beneficiary at the end of the trust administration.

12. The trustee should pay to himself or herself the compensation he or she is entitled to under the terms of the trust; and if none is provided for, “reasonable compensation” as authorized by California law.

13. After all estate expenses and debts have been paid, make the distributions to your beneficiaries called for by the trust.

14. Have an accountant prepare and file the needed income tax returns for you and for the trust.

The above statements are generalizations only and are not to be taken as legal advice for the reader’s particular situation.