- 1. Protecting the Elderly Today, for a Better Tomorrow Nakahara & Wasserman, LLP 3625 Del Amo Blvd., Suite 285 Torrance, CA 90503 Telephone (310) 371-880 www.nawalaw.com
2. Overview Incapacity Conservatorship Probate Alternatives 3. What will your golden years look like? 4. Fact Pattern: Surviving Spouse in his/her 80s. Owns a home free and clear Owns few CDs, annuities, and saving and checking accounts 5. Incapacity: physical or mental inability to do something or to manage ones affairs 6. Conservatorship A court supervised procedure where a conservator is appointed by a judge to manage the financial affairs and/or daily life of another due to physical or mental limitations, or old age. 7. Expense of Conservatorship The more assets you own, the greater the expenses associated with conservatorships. Court Fees: $2,000.00 Probate Investigators Fee : $800.00 Misc. Fees: $1,000.00 PVP Attorneys Fees PVP: $800-$5,000.00 Your Attorneys Fees: $5,000 or more Accounting Fees $1,000.00 Probate Referees Fees : $5,125.00 Bond (Insurance): $2,000.00 Grand total for first year: $17,725.00 8. Conservatorship Fees What if I dont have very little wealth? Does that make a difference? Who pays? Conservatorships court costs are the same even if you dont have much assets. If you need a conservatorship for any reason, it will cost you money. Examples: Your family needs to cash U.S. Savings Bonds, or access a small savings account, or sell a fractional interest in real estate. 9. Conservatorship Fees Question: What if I have absolutely no money and no one to take care of me? Who will make my decisions? Answer: the Public Administrator, and the tax dollars of the Los Angeles County pay for you. This in NOT a good alternative. 10. What happens if I die during a Conservatorship The Conservatorship is over, the Conservators attorney closes out the matter, does a final accounting with the court and then the estate (remainder of your asset) goes to probate. 11. Probate Probate is the court supervised process in which the court verifies and determines that the beneficiaries of the estate are actually entitled to received the decedents assets. 12. What is the cost of Probate? Assets worth $592,755.00 California Statutory Fees for Attorney and Administrator/Executor 4% of first $100,000: $4,000.00 $100,0004% 3% of next $100,000: $3,000.00 $100,0003% 2% of next $800,000: $ 7,855.00 ($800,0002% Total Fee for Attorney: $14,855.00Attorneys Fees: $14,855.00 Administrators Fee: $14,855.00 ( 13. What are my alternatives? Prepare a Revocable Living Trust because: It eliminates the need to start a conservatorship. It eliminates the need for probate. You can chose your beneficiary and determine how your wealth is distributed. 14. What are the costs of administering a trust for the elderly person with a Trust? If it is a simple estate, then it could be as little as $2000.00 in attorneys fees and recording fees. $2000,00 If it is a complicated estate, the costs will go up, depending on your assets, how title is held, and what was transferred to your trust during the time you had capacity, and what your trust states. 15. What is the difference between preparing a trust and doing nothing. In 2013, Carl (85 years old) owns a home worth $500,000, plus stocks, CD, bonds and annuity also worth $500,000. %500,000, CD, ANNUITY$500,000 He is incapacitated, and can no longer manage his finances, or take care of himself. Carl lives for another 6 years, until he is 91 years old. Lives in nursing home that is $5,000.00 per month = $360,000.00 $5000/ $360,000/ 16. Difference $37,725.00 Cost of Conservatorship Cost of Trust Administration during the life of Carl First Year Conservatorship Expense: $17,725.00 Year 2: $2,000.00 Year 3: $8,000.00 Year 4: $2,000.00 Year 5: $8,000.00 Year 6: $10,000.00 (close estate) Total Conservatorship Expense: $47,245.00 Approximate Attorneys fees with misc. expenses included: $2,000.00 ~ $5,000.00 Year 2: $1,000.00 Year 3: $1,000.00 Year 4: $1,000.00 Year 5: $1,000.00 Year 6: $1,000.00 Total Trust Administration Expense: $10,000.00 17. Difference of $62,955.00 Probate Expenses (after death) Trust Administration Expenses (after death) Nursing home expense 6 years $360,000.00 Balance at date of death: $592,755.00 Probate Fees: Attorneys fees: $14,855.00 Administrators fees: $14,855.00 Misc. court fees: $6,000.00 Total Expenses: $35,710.00 Left for beneficiaries: $557,045.00 Nursing home expense 6 years $360,000.00 Balance at date of death: $630,000.00 Trust Administration Fees/Expenses: $2,500.00 ~$10,000.00 Total Expense: $10,000.00 Left for beneficiaries: $620,000.00 18. What is estate planning all about? Estate planning is about taking care of your family when you are no longer able to, and putting your family in a better position to take care of you when the time comes.