Veterans are one of the few who raise their hands and pledge their life for their country. And yet, far too many veterans fail to properly plan for the inevitable. Estate planning is the most important thing that a responsible adult can do, as it will take care of your loved ones when you are gone. For this reason, everyone should at least have a Will, and for those with a moderate estate, a Trust as well.

Good news. If you die without a Will or a Trust, you don’t lose everything to the state. Instead, you have died intestate. That means that the State gets to decide what happens to your estate. What does this mean? Well, think back to what it was like in Bootcamp, or Basic Combat Training. Your drill instructors/drill sergeants/MTIs/RDCs certainly did take care of you. They ensured that you were fed, clothed, and usually housed. But how much care and attention did they give to you as a person? If you said “none” then congratulations, we probably had similar experiences. Dying intestate is a lot like that. The State will follow the rules that it has set out to determine who gets what, via a process called probate. The State will care about what you want and what your family needs just as much as the military did when you first got in. Even worse, probate takes time and money. And if you think that the joke is on the State because you don’t have any money, remember, everyone has an Estate. And the State always get paid. As for time, it is not uncommon for probate to take two years to fully distribute everything. It is for this reason, everyone should at least have a Will.

The first, and easiest thing that you can do to take care of your family, is to make a Will. Most veterans will be familiar with these, as most JAG lawyers can make one in their sleep. A Will is a legal document which determines where your estate goes. And your estate is everything that you own. Your house, your car, your bank accounts, even your dog tags. A Will spells out to whom each of your belongings will go to you after your death.

Wills are cheap, easy, and for the most part, effective. Wills do exactly what they set out to do. No more, no less.

Remember how we discussed probate, above? The process of the State slowly dividing up your assets, charging your family fees, and holding your estate until they are done? Well, a Will does nothing to avoid that. All a Will does is tell the State who gets what. The State will follow the Will, so long as it was properly executed. But you cannot avoid probate so easily.

The first and foremost thing that must be noted is that someone will be put in charge of the probate proceedings to actually get all of the assets distributed. That person is called an Executor. You can name one in your Will, or the State can appoint one if you die intestate. In California, where we are based, a lawyer named Executor can charge a “statutory fee” for his services. This is a percentage of what your estate is worth.

This is governed by Cal. Probate Code §§ 10810, 10811. The proper cost for an executory is as follows:

  • 4% of the first $100,000 of the gross value of the probate estate
  • 3% of the next $100,000
  • 2% of the next $800,000
  • 1% of the next $9 million
  • 0.5% of the next $15 million

What does this mean in practice? Let us assume that your entire estate (property, cars, bank accounts, etc.) comes out to be $900,000. Because of probate, the statutory fee will be $21,000. If that seems excessive, that’s because it is. And worst of all, because the fees are calculated based on the gross value, the court will not care about what the equity of your estate is. In laymans terms, that means if you haven’t paid off your mortgage yet, and because of that the actual value of your estate is only $600,000, you will still end up paying $21,000 in probate. Compared to that, court fees for probate, which start at $435, seem like nothing.

Irrevocable Living Trusts can best be explained by breaking them down. First, irrevocable. When you make an Irrevocable Living Trust, you can, at any time, modify or revoke the Trust. Secondly, they are living. This means that the Trust goes into effect while you are alive, unlike other types of Trusts which only are created after you die. And last of all, they are Trusts. A Trust is a legal fiction. It is moving your assets out of your name and into the name of your Trust.

To explain this, we can break down what goes into a Trust. There is a Grantor. He grants the assets that go into the Trust. There is the Trustee, who runs the Trust. And there is the Beneficiary, who benefits from the Trust. A Revocable Living Trust is ‘funny’ in the regard that the same person can take all three roles.

For example, Lt. Dan makes a Revocable Living Trust. He is the Grantor, as he made the Trust and it is his assets that go into it. He names himself the Trustee. So, Lt. Dan also gets to run the Trust, and manages everything inside of it. He is also the Beneficiary, so that while he is alive he gets the full use and benefit out of everything in the Trust. And because it is a Revocable Living Trust, he can modify or end the Trust at any time.

If this sounds like nothing has changed for Lt. Dan after making the Trust, then you are almost right. What has changed is that he has named a Successor Trustee and Successor Beneficiaries. That way, when he dies, the Successor Trustee will take care of the task of giving out the assets inside the Trust, and the Successor Beneficiaries will receive them. And, if he later decides that he wants to modify the Trust by adding or removing Beneficiaries, then he can. And, if he decides that he doesn’t want the Trust at all, he can end it at his leisure.

Any assets not placed in your Trust will still go through probate. Which may make you wonder, what is the point of a Revocable Living Trust if it doesn’t completely protect you from probate? The answer, is that it can only do that if you make the correct type of Will: A Pour Over Will.

Earlier we spoke of how Wills are quick, easy and cheap. This still remains true, but with a Revocable Living Trust, they need to do something more than what a Will can usually do. A Will has to help you avoid probate.

A Pour Over Will goes hand in hand with a Revocable Living Trust. What it does is, upon death, move all of the assets not listed in your Trust, into the Trust. This allows for your estate to completely avoid probate.

There are two more documents which could prove essential to you and your family. They are also documents that far too few people think of until it is too late. These are Advanced Medical Directives and Durable Power of Attorneys.

An Advanced Medical Directive allows you to state what kind of healthcare you wish to receive should you become unable to speak for yourself. Because just as how death reaches for us all, we all run the risk of becoming incapacitated. And should that happen, why not have the peace of mind knowing that doctors need to give you the type of treatment that you want?

There is also a Durable Power of Attorney. Most veterans should be familiar with a Power of Attorney. When you leave the country, you usually have one made so that someone at home can take care of your affairs while you are gone. A Durable Power of Attorney is different, in the sense that it does not go into effect immediately. It happens only if you become incapacitated, and thus cannot make decisions for yourself.

Combined with a Revocable Living Trust and a Pour Over Will, you will have everything done to ensure that your family is taken care of.

At the Veterans Legal Center, we offer affordable rates to save you and your family time and money. We customize our rates for the following:

  1. An Irrevocable Living Trust
  2. A Pour Over Will
  3. An Advanced Medical Directive
  4. A Durable Power of Attorney

Feel free to contact us today to speak to an attorney about planning for your family’s future.


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