The Law Offices of Julia P. Wald
April 4, 2012
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This photograph and others in today's newsletter were taken by Julia in or near Haines, Alaska.
Creating an estate plan and mountain climbing
Estate Planning vs.
Mountain Climbing
Dear Galen,

People think creating an estate plan is every bit as difficult and scary as climbing a mountain.

For some people these two enterprises may have a similar level of difficulty.  They may be scary for the same reason; both can make you think of death. 
Creating an estate plan can be as easy as skipping stones for you.
Mountain climbing is much easier and safer if you have an experienced guide and mountaineer with you. 

It is the same for estate planning.

With a good estate planning lawyer to help you, the task can be relatively easy for you. Difficult for the estate planner, but easy as skipping stones for you. 

This month's newsletter will explain two important concepts for estate planning:  what revocable trusts do and why they can make probate unnecessary.


TRUSTing Yourself

Your trust agreement is a document stating how you want your assets managed during your lifetime and what you want done with your assets when you die. It functions as a Will (after your death) and a power of attorney for finances (during your lifetime). So, what is the big deal with a trust agreement if you can accomplish the same thing with a simple Will and a power of attorney?


To answer that Question think about property ownership. 


Estate Planning mountains to climbSuppose you own a checking account, a brokerage account, and a house with the title to these assets in your name alone.  You need to plan for the management of these assets in the event that you are unable to manage them yourself (think dementia or death).  If you are incapacitated by dementia, IT IS TOO LATE to give someone the power to manage your assets, but if you have made a plan with your estate planning attorney, then all will be well.


With a trust agreement in place you will have done two crucially important things:  1) In the trust agreement you will have named a successor trustee (the trustee is the person in charge of the trust assets who will follow your directions as written in the trust agreement).  You will be the initial trustee and the trust agreement will specifically state that when you can no longer act as trustee, your named successor trustee shall take charge.  2) After signing the trust agreement you will have re-titled your assets to show they are owned by you AS TRUSTEE OF YOUR TRUST.  No longer will the deed to your house say  the grantee (think owner) is NANCY GORGEOUS, but you, Nancy, will have signed a new deed from NANCY GORGEOUS to NANCY GORGEOUS (OR SUCCESSOR TRUSTEE),TRUSTEE OF THE NANCY GORGEOUS 2012 TRUST.  


Now you have the information to understand why a trust is such a great estate planning device. Suppose you are hit on the head and are in a coma for a month (followed by a complete recovery, of course) and just before that injury you had arranged a terrific refinance at a very low interest rate, but the papers had not been signed.  Absent your trust, the loan would probably be lost.  But with a trust in place, completing the transaction is easy.


Estate Planning and title to your houseIf the title to the house were in your name, the lender would require you to sign a deed of trust (like a mortgage) to secure the loan.  The deed of trust would be recorded, thereby creating a lien against your house.  A house in your name alone cannot have a lien placed against it without your permission, and your permission needs to be given in writing, with your signature made knowingly by you.  Being in a coma prevents you from signing the deed of trust.  But, the outcome is much better for NANCY GORGEOUS.  She has signed her trust agreement naming a successor trustee and she has placed her house in the name of the trustee.  The new trustee need only prove that he/she is the successor trustee and he/she can sign the deed of trust.  The favorable loan will be in place when Nancy awakes from her coma and resumes the role of Trustee.



Similarly, having a funded trust makes it possible after you die for your successor trustee to give your assets to your chosen beneficiaries, all without the need for a probate.   


Lake in front of mountains The reason a probate is ever needed for assets belonging outright to you is that after you die, you cannot sign the deed (or other document) transferring ownership.  This sounds obvious and it is the crux of a probate.  You want your assets to be owned by your loved ones when you cannot own them.  But how are those loved ones to get title?   


Absent an executor being appointed by court, there is no recognized authority in California to put title to your assets in the name of the person you want to own them after you die.  A power of attorney will not work because it becomes void at your death.  A trust agreement, however, vests authority in your successor trustee to do what you can no longer do, re-title your property.  No court need be involved.  


And that is why I recommend to many clients to sign a revocable trust agreement.

The attorneys at the Law Offices of Julia P. Wald would appreciate the opportunity to discuss how we can make the mountain-appearing task of estate planning look more like a molehill.

Please give us a call at 415.482.7555 whenever we can answer your questions or schedule a meeting with you. 

The Law Offices of Julia P. Wald
1108 Fifth Avenue
San Rafael, California 94901
Alaska near Haines