FAQ: Estate Planning in Alameda and Contra Costa County

FAQ: Estate Planning in Contra Costa and Alameda County

Estate Planning Lawyer Contra Costa County

An Estate Plan may have been on your "to do" list for some time. You are not alone. Most of the couples I talk to in the San Francisco East Bay area have not yet done their estate plan. It's one of those things that just keeps getting pushed off to a time when you feel more relaxed, or have less on your plate. The good news is that it's actually pretty easy to start the process - and it probably won't take nearly as long as you think to complete it. So, jump in! Make an appointment, and get it done. Here's some questions you may have in the meantime:

PART 1: How an Estate Plan saves you Money

What is included in an Estate Plan?

An Estate Plan is a set of legal documents that typically includes a Will, Power of Attorney, Advance Health Care Directive, and Revocable Living Trust. Larger estates may include sub trusts, life insurance trusts, or other instruments to reduce estate taxes and distribute assets as smoothly as possible. Your attorney can advise you on this.

An Complete Estate Plan will:

  • Provide a complete plan for how and when your estate will be distributed to your beneficiaries
  • Name a guardian for the care of minor children
  • Name someone to administer your estate when you pass
  • Name someone to make financial/medical decisions for you if you become incapacitated
  • Reduce or avoid taxes associated with the estate

How can an Estate Plan save money?

  1. There are a host of ways that having well drafted estate planning documents will save you and your family money as you age, or when you pass. The first is touched on below, and often cited by attorneys as a reason to do your estate plan - "Probate."Generally the cost of a probate is higher, and the process much longer, as the court must oversee the distribution of your assets. See below for specific costs of Probating an estate in California.
  2. This is not the only way having an attorney complete your estate plan can benefit you, however. An experienced Elder Law or Estate Planning lawyer can ensure that your will and trust meet all of the legal requirements for validity. The probate court (the courts which handles estate law) can and is very discerning when it comes to the language and content of wills and trusts. If there are any mistakes or oversights, the documents can potentially be declared invalid.
  3. An attorney will also keep copies of your documents on file, should anything happen to your copies. While this may not seem likely, I have seen many instances in which wills are in questions due to forgery, and estate planning documents are misplaced or tossed out by accident. 
  4. An experienced Elder Law attorney can also help you guard against future litigation in regards to your estate. A huge percentage of estate litigation cases are predicated upon errors, lack of specificity, or missing information in regards to the intention of the testator (person who owned the assets and has died). While avoiding litigation is never guaranteed, an airtight estate plan provides significant protection against it. 
  5. A valid Power of Attorney document avoids conservatorship. A large portion of my elder law practice in Contra Costa County is devoted to helping family members establish conservatorships over parents or loved ones. A conservatorship gives one many of the same powers as a power of attorney, but must be done through the court. They become necessary when someone no longer has the mental capacity to sign a Power of Attorney, or there is a problem with their Power of Attorney (such as a coerced signature). In the SF East Bay, the majority of conservatorships I have established are for elderly persons with Alzheimer's or dementia. Unfortunately this is a medical condition which is strikingly common. The cost of a conservatorship in Contra Costa or Alameda county is typically upwards of $4000. Conservatorship matters of more complicated estates can be ongoing and much more expensive. They are typically paid for using the funds of the person being conserved. 
  6. The Healthcare Directive, also included in an Estate Plan,  is another document that can potentially avoid costs. A healthcare directive allows you to specify your wishes for end of life, should you be incapable of stating them at that time. Extraneous hospital bills or long term care costs can potentially be avoided. 

What is the cost of Probate?

Probate Costs in California will typically include a filing fee of $435-$465 + closing. $200-300. In addition, the executor of the estate is entitled to statutory fees based on the value of the estate. If an attorney is hired, the attorney will also receive statutory fees under California law. This is the base fee. Should there be any "extraordinary" fees, attorneys will also receive an hourly rate. In Contra Costa County, this is $325/hr. Extraordinary fees include work such as resolving disputes between family members, among other things. The fee structure for both the executor and the attorney (individually) is:

  • 4% of the first $100,000
  • 3% of the next $100,000
  • 2% of the next $800,000
  • 1% of the next $9 million
  • .5% of the next $15 million

The percentages refer to the total of the probated estate (any assets or funds that are not in a trust). To estimate the cost of probate, add up the value of all your assets and then calculate the amounts that go to the executor and attorney, add in court fees and additional attorney fees, and you have the total estimated cost of a probate. 

Part 2 of our Estate Planning FAQ will address the specifics of a Trust vs. a Will, and what you'll need to get started with your estate plan. I'll also provide details on when you need to update your estate plan. 

If you have any questions regarding your estate plan, I offer a free consultation from my Elder Law and Estate Planning office in Walnut Creek. I frequently work with clients from Lamorinda, Danville, Concord, Pleasant Hill, San Ramon, Martinez, and the surrounding areas of the San Francisco East Bay. Call 925-322-1763 to schedule your appointment. 

The Dangers of Probate: Embezzlement

This story is an example of what can happen in a worst case scenario probate. Probate is a court process by which an estate (funds and real property) is distributed when a person dies. Probate only occurs if an estate plan has not been set up. Under California law, this means a person's assets exceed $150,000 and their assets are not in a trust. Even if someone has a will, a probate still takes place.  Such was the case with Miriam Strong, long time Connecticut resident, who died in 2010 at the age of 85 with an estate estimated between 3 and 4 million dollars. This May, nearly 5 years later, prominent real estate attorney Peter Michael Clark, was arrested and charged with embezzling $1.8 million of that money. 

Clark was Ms. Strong's lawyer, and assisted her in drawing up her will, in which he appointed himself as co-executor of her estate. Why Mr. Clark did not have Ms. Strong put her assets in a trust to protect them is unclear. This misstep alone would guarantee Mr. Clark received at least $60,000 in legal fees when she died, because the estate would have to go through probate. This could have been avoided with an Estate Plan. 

In California, if someone dies without an estate plan, and there is no obvious choice for an executor (such as an heir), an attorney can be appointed as the executor of an estate. The executor, often with the help of an experienced probate lawyer, is responsible for distributing the assets of the estate and accounting to the court. In this case, the executor and the attorney were one and the same - and the unthinkable happened - the money "disappeared". The $1.8 million dollars was earmarked to go to the town of Oxford, CT for student scholarships and a new library, and Ms. Strong's church, which was desperately in need of repairs to its boiler room. The shocking part is that it took nearly five years for this embezzlement to surface. According to the affidavit, the Probate court scheduled a hearing to determine what had happened to the money after beneficiaries reported not receiving the funds. The FBI began an investigation, and Mr. Clark was arrested several months later. 

Despite the jokes made about attorneys, most attorneys I know in Contra Costa and Alameda County hold themselves to a very high ethical standard. And by law, an executor of an estate or trustee of a trust has a "fiduciary duty" to the beneficiaries of an estate. This means that they will act in the highest interest of the beneficiaries, and uphold themselves to the highest ethical duty of loyalty to those beneficiaries. According to an FBI report, Peter Michael Clark had filed "false and misleading documents" to the probate court, indicating that the money had gone to beneficiaries when instead it went to himself. It seems that greed overcame Mr. Clark and he became blind and deaf to his responsibilities. In a similar case involving embezzlement by tax collector Karen Guillet, when questioned by the judge if substance abuse led to her severe misjudgment, she replied "no," it was simply greed.

One interesting point to note is that typically, an executor or trustee is bonded until the will or trust is administered in full. A bond, in short, is an insurance policy.  While the bond can be waived by the beneficiaries or the court, this is not what I recommend as a Probate and Trust attorney. A bond, in short, is an insurance policy. If Mr. Clark had been bonded, the bond company would "insure" him for the full value of the estate, and should anything happen with the money, they would pay the beneficiaries what they were entitled. This means the town of Oxford and Ms. Strong's church would get their money, and no longer have to worry. The bond company, in turn, would sue Mr. Clark to recover the funds. It is unclear if this is what occurred in this particular probate case. It does appear Mr. Clark was sentenced to 4 years in prison, however, which seems low given his crime.

This is a particularly stark example of what can go wrong if one fails to do an estate plan. An estate plan does not guarantee that no foul play will occur, but it certainly lessens the chances. For more information about drawing up your estate plan, or assistance with your trust or estate, I offer a free 30 minute consultation at my estate planning and elder law office in Walnut Creek.