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 Outdated trusts can cause legal issues.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