On September 20, 2010, California passed Senate Bill 202 which affects the rights and responsibilities of trustees and beneficiaries.

Here are six points to keep in mind:

(1) gives a trustee the power to terminate a trust whose assets are under $40,000 in value  instead of current $20,000 in value level;

(2) when a trust becomes irrevocable, requires the trustee, on reasonable request, to report to the beneficiary regarding the terms and administration of the trust.  Exception – if the beneficiary and trustee are the same person;

(3) allows a beneficiary or trustee to petition the court to determine the existence of a trust if a trustee has failed to report the requested information within 60 days after written request,

(4) requires a court to compel a trustee to account, regardless of waiver by a beneficiary, upon a showing that it is reasonably likely that a material breach of the trust has occurred and would provide when a waiver is void as against public policy;

(5) permits a court, on its own motion, to set a hearing  to show why a professional trustee should not be removed, for not having a valid professional license;

(6) requires the trustee to provide a true and complete copy of the terms of an irrevocable trust, or the irrevocable portion of the trust, to any beneficiary or heir of a deceased settlor who requests it, as provided, including when the power of appointment is effective or lapses upon the death of a settlor, except as provided, to any beneficiary whenever there is a change of trustee of an irrevocable trust (and if the trust is a charitable trust subject to the supervision of the Attorney General, to the Attorney General) as provided, and specifies that  the duty to serve the notification by the trustee is the duty of the continuing or successor trustee.

(2009 California Senate Bill No. 202, California 2009-2010 Regular Session; Version: Adopted, September 30, 2010).  The legislation amends sections 15408, 16061, 16061.5, 16061.7, 16061.8, 16064, 16336.4, and 17200 of, and to add sections 16060.7, 16068, and 16069 to, the probate code, relating to probate.

Thank you to the Institute for Healthy Aging at Keiro for putting on a great conference in Oxnard.  I had the pleasure of meeting many people who had questions regarding estate planning.


A typical living trust for a couple will name the husband wife as the original trustees.   If either spouse becomes incapacitated, the other spouse can act as the trustee.

The living trust can be set up so that if the surviving husband or wife becomes incapacitated, the successor trustee steps up to administer the trust.  A trust can provide built-in protection against  formal court proceedings to allow a judge to appoint a conservator to administer a person’s financial affairs.   This could save a family thousands of dollars in legal fees and costs.

Ventura Conference

April 20, 2010

I will be  giving a presentation at this conference:
12th Conference and Resource Fair for Caregivers
Presented by The Institute for Healthy Aging at Keiro, Oxnard Buddhist Temple and Ventura County
Japanese American Citizens League
Saturday, June 26, 2010
Oxnard Buddhist Temple
250 South H Street
Oxnard, CA 93030-5209
8:30 am Registration
9:00 am to 2:00 pm Conference
Sponsored by Keiro Senior HealthCare with partial funding from The Takayama Foundation, California
Community Foundation, and Keiro’s Endowment Fund
For more information, please contact Kanako Kusano at 323-980-2353 or kkusano@keiro.org.

1.  What’s the difference between a Living Trust and a Will?

A will is simple to create and relatively inexpensive

A trust takes more time to create and will be more expensive to set up than just a will.

The main advantage of a trust is that unlike a will, a trust can avoid the court’s involvement or probate.   For estates over $100,000, probate by the court is required.  Probate fees authorized by law are $13,000 for a $500,000 estate.

A trust has another distinct advantage as it can make full use of tax exemptions for a husband and wife.

Finally, a trust maintains privacy and is flexible.

2.  Is it better to use an attorney than a “do it yourself” software?

When it comes to a living trust or revocable trust, one could easily spend a good amount of time learning and understanding the nuances and options that trusts offer.  It is analogous to a homeowners doing simple projects on their own or hiring licensed contractors to handle more complex jobs.

The knowledge and experience of a qualified attorney would most certainly be an advantage in preparing comprehensive estate planning documents with the least amount of wasted time and effort.  You want to be sure that when the trust and estate planning documents are needed, that they will work.

3.  What are things I should watch out for?

First, you should consult an attorney that you are comfortable with regarding your estate planning documents.  The services offered and price vary widely.

Second, ask if the attorney will prepare the documents needed to fund the trust.  The process of transferring  assets to a trust is called ‘funding the trust.”  Firms that offer excellent service generally prepare a grant deed so that your home will be properly transferred into the trust.  You should also ask the attorney charges extra for recording and notary fees.

4. I’ve been wanting to get one done, but I’m really busy.

Procrastination especially in the area of mortality is common.

Saving money and avoiding taxes should be something no one wants to procrastinate.

An estate plan package generally takes about 3-5 hours of your time to complete, and can be done in two appointments.  In my opinion, the time and expense invested to insure that your family is taken care of is minimal.

Probate is a court procedure that legally transfers title from a deceased person’s estate (assets such as real property, money, possessions), to the heirs.

Having a testamentary will is better than nothing as it expresses one’s wishes as to the distribution of your assets after death.  However, whether one has a testamentary will or not, if the estate is worth more than $100,000 in California, probate must take place.

Under the law, an executor is entitled to a set amount of fees for a probated estate as follows:

  • 4 percent of the first $100,000
  • 3 percent of the next $100,000
  • 2 percent of the next $800,000
  • 1 percent of the next $9 million
  • .5 percent of the next $15 million
  • Over $25 million, reasonable amount to be set by the court.

For an estate worth $200,000, the executor’s commission would be $7,000.  For an estate of $1 million, the commission is $23,000.

The advantage of a revocable trust, commonly called a living trust, is that it avoids probate altogether, if funded properly.  Thus the living trust could save you several thousands of dollars in court fees (executor’s commission). Setting up a living trust is usually more expensive than just preparing the will.

Advanced Health Care Directives are often called Living Wills.  This document spells out end of life options to a person’s agent.  This document is often included in estate planning packages.

You should consult an attorney as there are pros and cons as to which legal documents best suit your needs.

“The most important planning action today is to make sure that your current estate planning documents will work with today’s estate tax laws….”

Estate Tax Update. Until mid-December 2009, most of us expected that we would end up with a permanent extension of the 2009 version of the federal estate tax law, which would protect the first $3.5 million worth of assets and provide a flat 45% tax rate on everything above that amount.  In early December, the House of Representatives acted to pass legislation imposing a permanent $3.5 million estate tax exemption.  During late December, the Senate, which was mired down with the health care debate, never addressed the estate tax.  Nothing was passed.

As a result, effective January 1st 2010, the federal estate tax was repealed.  Under current law, it will only be repealed for the 2010 calendar year.  Also under current law, beginning in 2011 the estate tax is reinstated with only $1 million protected and a 55% maximum rate above that amount.

We currently have total uncertainty surrounding our estate tax law.  What we do know is that as of January 1st there is no federal estate tax.  We also know that some members of Congress are now saying that they plan on retroactively reinstating the estate tax as if it had not ever been repealed.  Whether the Senate will ever get enough votes to accomplish this is unknown.  Whether a retroactive reenactment of a tax can be done legally is also unknown.

What Does This Mean for You? As we move further into 2010, we may begin to see action by Congress.  Until then it is important to keep your estate planning documents as flexible as possible.  For most clients, a long-term estate planning view should assume that there will be some form of estate tax in place at your death.  For clients who might be facing death in the near future, the possibility of dying during 2010 without an estate tax may necessitate modifications to the existing estate planning documents.  If Congress is unable to act and we end up in 2011 with the reduced $1 million exemption, then the estate tax will again become a very significant tax affecting many families.  Whatever happens, there will be a need to revise your estate planning documents.

The most important planning action today is to make sure that your current estate planning documents will work with today’s estate tax laws.  At the very least, a review is in order.  In many cases, it may be necessary to amend your existing documents to work in the 2010 uncertain legal environment where there is no federal estate tax.  This is also a good time to confirm that your assets are properly titled to work with your estate planning documents.

Conclusion. Given the uncertainties of the estate tax law at this time, it is difficult to make any long-term generalizations.  We believe it is critical that you consider how the current situation might impact your estate plan.  You need to review your estate planning documents to make sure that they will work with today’s law.  This is critical.

Opening Blog

March 22, 2010


Decades ago, while running for student body president, I would pass out play money to my schoolmates bearing the motto:


When I started focusing on my trust and estate practice, this motto resurfaced as the inspiration for my new blog.

I hope you enjoy this blog and find the information useful.


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