Estate Planning

Mayo & Mayo charges a reasonable flat fee for most estate plans. We can provide a quote and the information needed for us to provide you with a first draft of your Trust. A Living Trust costs significantly less in legal fees than a probate. Probate fees for executors and attorneys are set by California statute based on the gross value of the estate, e.g. a $1 million home is $23,000 before court costs and this is then doubled – paid twice – with this amount paid both to the executor and the same amount paid to the probate attorney.

If you have a properly funded revocable living trust you can avoid probate in California. Financial and retirement accounts can name designated beneficiaries called pay on death (POD) or transfer on death (TOD) accounts. However, POD and TOD accounts do not apply to real property, or interests in an LLC or corporation. Real property can avoid probate by properly funding your real property into a revocable living Trust. Setting up a revocable living trust simply means you choose your beneficiaries, successor trustees and guardian of minor children and work with your estate planning attorney to properly fund your revocable living Trust.

If you own real property, a Revocable Trust with a Pour-Over Will can transfer your real property into the Living Trust to avoid probate. The Pour-Over Will associated with the Revocable Trust does not name individual beneficiaries but instead specifies that all assets are to go (pour-over) into the Trust

A simple Will without a Trust may be sufficient if you do not own any real property, private stock or an LLC membership, and your assets total less than $184,500. A California Small Estate Affidavit is used to transfer assets after death if the assets total less than $184,500. Otherwise, the Executor you name in your Will must file a probate and get a Court Order to distribute your estate to the beneficiaries you name in your Will.

https://www.contracosta.ca.gov/DocumentCenter/View/36799/Excess-Proceeds-Probate-Affidavit-Form-PDF Otherwise, the Executor you name in your Will may need to file a probate and get a Court Order to distribute your estate to the beneficiaries that you named in your Will.

Both the Pour-Over Will and the simple Will enable you to choose who will serve as your child’s legal guardian if you pass away before they reach legal adulthood.
There are two types of legal guardian – guardian of the person and guardian of the estate. You can name one person as guardian or you can designate one person to be guardian of the person responsible for decisions about care and living arrangements and another person to be guardian of the estate responsible for the financial affairs for your child.

Assets can only be transferred into your revocable Trust after your Will and Trust have been fully executed and the Trust notarized.

Real property is transferred into a revocable trust with a new deed that is notarized and recorded with the County in which the real property is located. Title on the new deed that we will prepare for you will read your name as trustee of the trust, e.g., “Jack Doe, trustee of the Doe Revocable Trust”.

Bank accounts and brokerage accounts can either be retitled like the new deed with your name as trustee or you can designate specific people as beneficiaries on your accounts, also called pay on death (POD) or transfer on death (TOD) accounts.

No. A revocable trust is a ‘see-through’ entity and you as the Grantor Trustor continue to use your social security number for tax reporting on IRS form Schedule A to deduct your mortgage and property taxes on your primary home and on IRS form Schedule E for your rental property. When the Grantor/Trustor dies and the revocable Trust becomes an irrevocable Trust the successor trustee will obtain a new taxpayer identification number for the irrevocable Trust and begin to distribute the assets of the Trust as set out in the terms of the Trust.

A revocable Trust means changes can still be made, i.e, revocable. Changes cannot be made to an irrevocable Trust, i.e, irrevocable. For example, when the Trustor is alive and has legal capacity, the Trustor can make changes, amend or revoke the Revocable Living Trust.

When the trustor dies or becomes incapacitated the revocable living Trust becomes irrevocable because the trustor can no longer make changes. This is distinct from an irrevocable grantor trust explained below.

First, there is no step-up basis for assets conveyed to an Irrevocable Grantor Trust executed by the Grantor Trustor. An Irrevocable Grantor Trust is a trust established while the Grantor Trustor is still alive and usually cannot be changed, amended or revoked during the Grantor Trustor’s lifetime, i.e., irrevocable. The grantor usually loses control over the assets funded into an Irrevocable Grantor Trust and there is no step-up basis to fair market value on the death of the grantor. See IRS Revenue Ruling 2023-2 https://www.irs.gov/pub/irs-drop/rr-23-02.pdf

Second, there is a step-up basis for assets conveyed into a Revocable Trust executed by the Grantor Trustor. A Revocable Trust is also called a Living Trust. A Revocable Living Trust can be changed, amended or revoked during the Grantor Trustor’s lifetime, i.e., revocable. A Revocable Trust only becomes irrevocable on the death or incapacity of the Grantor Trustor who at that point can no longer make changes.

When the Trustor dies the assets in the Revocable Trust established by the Grantor Trustor receive a step-up basis for income tax purposes to the fair market value as of the date of death of the Grantor.

For example, if the successor trustee sells a stock held in the Trust the capital gain or capital loss is calculated as the difference between the fair market value as of the date of death (new basis) and the sales price on the date sold by the Trustee. This then becomes either a capital gain or a capital loss to the Trust to be reported on the income tax return for the Trust.

If the Trust permits the trustee to distribute the stock in-kind to the beneficiaries, the basis of the stock distributed to the beneficiaries is usually the date of death value and the beneficiaries can control the sale of their share of the stock to a time most beneficial to the beneficiary. Check with your tax professional to discuss how an in-kind distribution may be beneficial to your own tax situation. Usually, the distribution itself of the in-kind distribution of stock is not taxable to you as the beneficiary and no taxable event occurs until you sell the stock. At that point if the trustee has distributed the stock to you in-kind with the date of death value as your basis, your capital gain or loss will be the difference between the date of death value basis and the sales price of the asset.

You will be surprised at how easy it is to establish your estate plan. The information needed for a first Trust draft includes your name(s) as shown on your driver’s license for the notarization and the names of your children and intended beneficiaries. Your Will names the guardians for your minor age children. If you don’t have easy access to your deed so that your home can be transferred into the Trust and avoid probate, we can order a copy for you. Initial consultation is always complimentary – call or text 415-397-1515