Episode Summary:
In this insightful episode, I sit down with David Schneider, a seasoned estate planning attorney, to discuss the crucial aspects of estate planning. We explore common mistakes, the importance of having a trust, and how failing to plan can cost families tens of thousands of dollars. David shares real-life cases, explaining why estate planning is essential for every homeowner and how proper preparation avoids probate, delays, and unnecessary expenses.
Key Takeaways:
1. Why Every Homeowner Needs an Estate Plan
- In California, probate proceedings apply if a homeowner passes away with assets over $184,500.
- Probate is time-consuming and costly, eating up tens of thousands of dollars from estates.
- A revocable living trust ensures assets pass smoothly without probate delays.
2. Common Pitfalls in Estate Planning
- Not Funding the Trust: Many people create a trust but fail to transfer their home and assets into it. Without proper funding, the trust is useless.
- Failing to Update the Trust: Life changes (marriage, children, property purchases) require updates. Outdated trusts can cause legal issues.
- Misunderstanding Successor Trustees: Picking multiple co-trustees can cause family conflicts. It's often best to appoint one responsible person.
3. The Hidden Costs of Probate
- Attorney fees and executor fees are calculated based on the gross value of an estate, not the net equity.
- On a $1 million estate, probate fees alone can exceed $40,000.
- Personal representatives can charge the same amount as attorneys, doubling the cost.
4. Avoiding Legal Roadblocks
- If a homeowner becomes incapacitated (e.g., dementia), their spouse cannot automatically sell the home unless it's in a trust.
- Power of Attorney does not cover real estate transactions after incapacity unless properly structured.
- Naming a guardian for minor children is critical to ensure their care in case of an untimely death.
5. Administering a Trust: What Happens After Someone Passes?
- Successor trustees must follow California probate code, which includes formal notifications and legal procedures.
- Mistakes in trust administration can lead to lawsuits and prolonged court battles.
- Working with an estate planning attorney simplifies the process and ensures compliance.
Final Thoughts & Action Steps:
- If you've refinanced your home, check that your property is still in your trust. Lenders often remove it during refinancing.
- Estate planning is not just for the elderly—every homeowner should have a trust in place.
- Review and update your estate plan every 5-10 years or after major life events.
CONTACT INFORMATION:
David Schneider
https://www.drs-law.com/
(805) 374-8777
