Probate, Trust and Estate Planning Tidbits: July 2012

Welcome

Hi, my name is John T. Anderson. Welcome to my blog! I have been practicing law in California since 1975 and have been the Chairman of the Estate Planning and Probate Section of the Long Beach Bar Association since the mid-1980s. I'm also certified by the State Bar of California Board of Legal Specialization as a specialist in Estate Planning, Trust and Probate Law. On this blog, you will find articles written by me regarding estate planning and probate in California. Many of these articles address recent changes in the law and summaries of the Long Beach Bar Association’s Estate Planning and Probate Section meetings. I hope that you find these articles helpful. If you would like more information about me or my law office, please visit my website at www.trustlaw.ws or contact my office at 562.424.8619.

Friday, July 13, 2012

Most Common Estate Planning Mistake: Improper Vesting of Title

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I get called upon to review many estate plans previously prepared by other attorneys. Other than some plans which are so ineptly prepared, the number one mistake I find is improper vesting of title so it will be an asset of the trust.

Here are a few guidelines to avoid this mistake:

1) The trust cannot hold title

2) Title should be in the name(s) of the trustee(s) of the trust pursuant to the terms of the trust.

3) The name(s) of the trustee(s) should be just as he/she/they are listed in the trust (full name, or middle initial, or …) and the name of the trust should be spelled out EXACTLY as it is set forth in the trust.

4) The deed and appropriate assessor forms must be sent to the Recorder.

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John T. Anderson, Section Chair

Certified Specialist in Probate, Trust and Estate Planning

By the California State Bar Board of Legal Specialization

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2012.07.10 Most Common Estate Planning Mistake.docx

Tuesday, July 10, 2012

Post-Death Trust Administration: Reasonable Fee for Trustee

I, along with others, were recently asked what a reasonable hourly fee is for a trustee for a post-death trust administration.

The consensus, and what I advise my clients, is as follows:

For the non-professional, I tell them to keep a strict record of their time and to figure somewhere between $25 and $50 per hour (a typical fee for a professional trustee with training, bonding, and expertise is around $100 per hour). Then I advise them to look at the complexity of the issues they were required to deal with. The more straight forward everything is and the more helpful and cooperative everyone is, to lean toward the lower figure and to a higher number if the opposite is true. I tell them to realize that, if they are a beneficiary, part of the fee is coming from their own, otherwise income tax- free funds, and the fee now becomes ordinary income for income tax purposes.

Whichever rate they choose to compute the fee, I then tell them to compare it to a fee of one percent of the trust estate. If they are under that figure, they are in the ballpark. If over, they need to determine how they can rationalize the fee in light of the fact that a judge, who might be called upon to review it, will examine an excessive fee very critically.

I tell trustees that they are probably also fine taking a flat one percent fee that should be set forth in their accounting, but they might also be creating a situation that will be more likely to cause a court review at the request of a beneficiary. For example, it probably will not look good to take a one percent fee on a trust estate with few debts and the only asset being a $1M CD.

In any event, the rate charged for the fee; the basis for the fee; and, the final amount, should all be set out and explained in the accounting to beneficiaries.

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