Overview of The Client Checklist
(1) CURRENT REPRESENTATION CONFINED TO LIVING TRUSTS: You acknowledge that you have currently engaged us for a living trust only and no other estate planning or legal services. Any other legal services require a separate signed engagement letter setting forth the agreed to expectations, engagement and scope of representation. Absent such, you acknowledge that you have not engaged us for, nor is there currently any expectation for any other estate planning or other legal activities, such as advanced or international estate or tax planning, irrevocable trusts, life insurance trusts, charitable trusts, elder care, Medicaid planning and trusts, (family) limited partnerships, or asset protection plans, etc. You also agree that once your trust is completed (or if you cancel your appointment, or if you do not follow through or agree to proceed) that we have concluded all matters that you engaged us for.
(2) ESTATE TAXES: A living trust is designed to keep your assets and estate out of probate (to avoid probate). Probate fees and estate taxes are not the same and are not to be confused with each other. As the law stands today each U.S. person can pass $5+ Million completely estate tax free (and a U.S. Citizen surviving spouse up to $10+ Million estate tax-free). Warning: If you are NOT a legal U.S. Resident you can only pass $60,000.00 (sixty-thousand dollars) estate tax-free. A living trust cannot and will not avoid death and estate taxes if your estate exceeds the amount you are allowed to pass tax-free. If you anticipate that your estate will exceed the amount you can pass tax-free you may want to seek additional legal advice on potential “advanced estate planning” strategies.
(3) LEGAL ADVICE AT DEATH: Although a living trust can eliminate a lot of headache and paperwork at someone’s death, this should not be construed to mean nothing has to be done. Whenever anyone dies it is important that legal and tax guidance be sought shortly afterwards. It is important that certain formalities and tasks be completed so that all legalities are met, and to ensure that among other things, all available protections, abilities to disclaim, tax options, and other benefits are well known and utilized. Though we do offer advice at death, you are under no obligation to use this office.
(4) A REVOCABLE, AMENDABLE TRUST: While you are alive, you can revoke your trust, or amend (change) your trust anytime you wish. When you do so, it is important to observe certain formalities. WARNING: A note in the margin of your document, writing on your document, or striking out words does not constitute a valid amendment. While you can employ this office to accomplish an amendment, you are under no obligation to — nor do you need our permission or blessing. However, unless we prepare the amendment, we cannot become involved in judging its legal sufficiency or content — and we take no responsibility for any amendment prepared independently outside our office.
(5) CHANGING ASSETS IS NOT CHANGING (AMENDING) YOUR TRUST: Simply adding or disposing of assets in the name of your trust is not an amendment, nor is there normally a need for an amendment in such a case unless you wish to change the actual terms of the trust itself (i.e., To gift that new asset to a certain person). However, if your trust names a specific asset or account to go to someone and you sell or dispose of it, then you should amend your trust to deal with the fact that such asset no longer exists. Failure to address this can cause many problems.
(6)IMPORTANCE OF TITLING YOUR ASSETS IN YOUR TRUST: It is your responsibility to make certain that your current and future assets are titled in the name of your living trust. Proper wording is set forth on the first page of your trust. Qualified retirement plans (IRAs, Keoghs, 401Ks, 403Bs, etc.) are the one major exception and should not be titled in your trust (though, like life insurance, you can designate beneficiaries). More details are in the handout entitled “Titling Your Assets in the Name of Your Trust” — which you hereby agree to read and refer to in these regards. Please be advised that our beneficiary designation guidelines are from a trust administration and management point of view and do not necessarily coincide with optimal tax strategy (especially if any beneficiary of your trust is a non-person such as a charity). It is possible that pursuing different beneficiary designation strategies will provide more optimal long term tax advantages, which is why we advise discussing this with a professional tax advisor versed in the intricacies of qualified retirement plans. We do not advise on this.
(7) EXCEPTION — RETIREMENT PLANS NOT TO BE TITLED IN TRUST (IRAs, Keoghs, 401Ks, 403Bs, etc.): Qualified retirement plans (such as IRAs, Keoghs, 401Ks, 403Bs, etc.) are the one major exception to the above rule and should not be titled in the name of your trust. Instead (like life insurance) you are allowed to designate beneficiaries. The “Titling Your Assets” handout sets forth guidelines for doing so, which you hereby agree to read. These are guidelines from a trust administration and management point of view and do not necessarily coincide with optimal tax strategy. There seems to be an unending number of potential tax saving options and repercussions that can occur by pursuing various beneficiary designation strategies that may give more optimal long term tax advantages than spouse or trust beneficiary designations. We cannot advise you on this. You should discuss these other available options with a professional tax advisor versed in the intricacies of qualified retirement plans.
(8) “POUR-OVER” WILL The “Pour-Over” Will that comes with your trust package is a regular Will which simply says you leave everything to your trust. It functions as an emergency backup to “pour” any assets which may exist outside of the trust at your death, into your trust. Of course, anything which goes through a Will must go through probate, so your goal is to make sure this Will is of little or no use. If you title all your assets in the trust as you are supposed to, you will achieve this goal. Also, the practicality and application of the “Pour-Over” Will depends upon the existence of your living trust. If you revoke or amend your trust you need to do a new will.
(9) Legal Advice Upon Any Change In Marital Status: Any change in marital status necessitates revisiting, updating and restating your estate plan from both a practical and legal standpoint. If you marry, remarry, separate, file for, or become divorced this can vastly affect your intentions, estate plan and trust – and will likely invalidate such. You are hereby instructed that you should seek immediate legal advice from a qualified attorney and update your estate plan upon any such change in marital status.
(10) Gifts to Care Custodians Require Certificate of Independent Review (Probate Code 21350): If you are leaving a gift or part of your estate to a caretaker / care custodian, then you are hereby advised that for such a gift to be upheld and valid, California law requires you to obtain a “Certificate of Independent Review”
(11) THE IMPORTANCE OF EXECUTING A DEED FOR EACH REAL ESTATE PROPERTY (CURRENT & FUTURE ): It is vitally important to title all current and future real estate property in the name of your trust by executing and recording a deed transferring it to your trust. As part of your trust process, this office generally prepares Deeds for transferring your current real estate properties to your trust (if you have provided the necessary information). It must be emphasized that the Deed will transfer to your trust the exact interest you own (whatever that is) in the described property at the time you sign the deed. DO NOT FORGET that if you later acquire new real estate property or more of or a greater percentage or interest in a property that you will need to execute a new “Deed”.
(12) WARNING WHEN REFINANCING A PROPERTY OWNED BY YOUR TRUST: In the course of a refinance, property is often “taken out of the trust” and titled back into your individual name. Therefore, at the close of the refinance process, the real property must be re-titled in the name of the trust – or – as it is sometimes referred to: “put back in the trust.” Since we have no way of knowing what occurs in each individual financing transaction, whether or not a property was taken out of the trust, and whether or not it was put back in the trust our blanket advice is to make sure you execute and record a new “Deed” to your trust after the close of any financing transaction on the property.
(13) TRANSFERS TO A REVOCABLE LIVING TRUST ARE GENERALLY EXEMPT FROM RE-ASSESMENT: Nearly 100% of real property transfers to a living trust are exempt from property tax reassessment under California law. (Experience indicates this to be true of all states though we cannot make a blanket statement.) However, if you currently own property in Joint Tenancy with a non-spouse or non-child, and during the creation of this joint tenancy a reassessment was avoided under special provisions of Revenue & Tax Code Section 68 (f), you need to be aware that some counties are attempting to reassess if the Joint Tenancy is broken through transfer to a living trust.
(14) TITLE ISSUES: 1) While it is safe to say the service we use and efforts we make to determine current title to real property are usually accurate (as we have never had a known problem in 28 years), it should not be construed in any way as full title research and absolute guarantee as to accuracy of title or property descriptions. (For that you should consult a real estate attorney.) 2) Though in 28 years we’ve never once seen this become an issue, we must officially advise you to check that your title insurance coverage extends to your trust. Most post-1998 title insurance policies do and if not, many title insurers will add a trust endorsement for free or a nominal fee. 3) We find that other people are often on title and listed on the deed as part owners or joint tenants (often put on for loan or other purposes). For whatever reason they are on title, under the law they are viewed as having an ownership interest. Unfortunately, this is often not the intent, but it is still the result. This can create problems as well as unintended gift tax implications. If you have such a situation, we advise you to consider “clearing it up”. You may need to seek advice from a real estate attorney and/or tax advisor because it can become quite complex to unweave these problems, including but not limited to: deciding whether these people actually own an interest or asking these people to sign off; possible gift tax implications; possible city tax and documentary transfer taxes etc. We do not offer this service.
(15) TRUST ORIGINALS & COPIES:All in-office clients leave our office in possession of (1) All signed trust originals and related documents (in a clear plastic envelope) and (2) A complete page-for-page copy of all signed originals in a 3 ring binder (except trust by mail clients who are supplied with a PDF copy) and (3) are provided an electronic PDF copy (if desired). We highly advise separating the originals (plastic envelope contents) from copies (white binder contents) and to store these in two different places for safekeeping. Also from time to time, we receive requests from clients and other interested parties for another copy of their documents. Please be aware that we impose significant fees for this as a way to discourage using us as a repository, secretarial or copy service. We would much rather you keep your money and make your own copy. So please, we encourage you to make all the copies you feel necessary so at least one would be available if the need arises. As a final note, even if the fees are paid we will not take instructions from or supply copies of any documents to anyone other than the client or successor trustee of a deceased client (whereupon it is the client’s responsibility to forward such needed documentation to the institution or interested party).
(16) PRUDENCE DICTATES PERIODIC REVIEWS OF YOUR ESTATE PLAN: Because life, laws, holdings, and circumstances often change, time erodes and “detunes” the best estate plan (regardless of whether it is a trust, will, or other alternate method). In conducting many reviews it is rare for us not to catch something and in many cases it is property that the client has failed to title in their trust (which alone has the potential to trigger probate and cause huge problems and expense if not remedied). Thus prudence dictates an ongoing strategy of revisiting these matters, as we survive long enough to outdate our estate plan. How often that is depends upon changes in the law and changes in your life, wishes, circumstances, and holdings. Experienced professionals advise a review every three years but the given pace of events and/or change of circumstances can accelerate or decelerate the need. Yet, since we can’t track each client’s life or predict future law changes, we therefore advise following the three-year rule of thumb (or sooner if there is a major change in circumstances). The decision is ultimately yours but our advice remains the same.
(17) IT IS IMPORTANT FOR YOU OR YOUR REPRESENTATIVES TO NOTIFY US OF ANY ADDRESS AND/OR PHONE CHANGES OR ANY OF YOUR DEATHS: It is possible that at times, we may need to contact or give instructions to you, (or whoever is in charge of your trust and affairs at the time) – and it may be about something critically important. That is quite impossible to do if we do not have a current address and phone number – or are even aware that someone has died. While no one is under a legal obligation to do so, if there is a death or a change of address or phone number for relevant information to go to, you hereby agree to inform us of this in writing, by a letter delivered by registered mail (and agree to inform and charge your successor representatives and trustees with this same duty). You hereby agree that any letters or notices sent to the last address provided us as stated shall constitute diligent and reasonable effort to contact you, your representatives, your successor trustees, or other successors in trust and such shall constitute full legal notice to any of the above, and be considered properly sent – and YOU HEREBY AGREE TO HOLD US HARMLESS FOR ANY RESULT OF ANY FAILURE TO FOLLOW SAID PROCEDURE INVOLVING RELEVANT ADDRESS CHANGES OR ANY FAILURE TO INFORM US OF A DEATH.