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Trusts & Estates Law/DPOA vs co-trustee on a living trust

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Question
hi Janet - Would you please give me your opinion regarding a living trust in California. Is there any reason that a durable power of attorney  would be better or worse than becoming a co-trustee on my parents trust (they are both living) so that I can help (at their request) with their finances. This is in regard to accounts that are in the name of their trust.

Thank you!

Answer
Thank you for your question.  While a DPOA would work while your parents are alive, it ends at their death.  If they have more than $150,000 of assets in their own names at the death of the surviving spouse, those assets would need to go through probate, which is very expensive in California (for example, if their only asset were a $500,000 house, the probate fee would be $13,000 even if the house had a $490,000 mortgage on it).

Assets held in joint tenancy pass to the surviving joint tenant without probate - BUT in my opinion it would be a terrible idea to add your name to their assets as a joint tenant ... first, there are potential gift tax consequences and second (and more importantly), if YOU become a joint owner, they are subjecting their assets to any financial problems you might have (for example, if you hit a busload of school children and didn't have enough insurance, the bereaved parents could empty out the joint bank accounts you shared with your parents (because you are a joint owner in the eyes of the law).

All-in-all, a trust solves many problems.

Regards
Janet

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Janet Brewer

Expertise


BE CAREFUL about taking legal advice from non-lawyers.

I am a licensed attorney in California. I am available to answer questions about probating estates, preparing wills and trusts, administering estates and trusts, forming family limited partnerships and limited liability companies, and establishing a wide variety of estate and gift tax-sensitive trusts (charitable trusts, children's trusts, irrevocable life insurance trusts, etc.).

I can also answer questions regarding the preparation of estate tax returns (Form 706) in taxable estates. Please note that I do not prepare trust income tax returns and cannot provide you with any information about that type of return.

Please note: I am only able to practice law in the State of California. I cannot answer specific questions about other states' laws; I can only provide some "general" information that may or may not apply to your situation.

Experience

I have practiced California estate, gift-planning, and probate law exclusively since 1991. I am certified as a specialist in estate planning and probate law by the California State Bar Board of Legal Specialization (there are less than 125 such specialists practicing in Santa Clara County and fewer than 7,000 practicing in California - out of over 170,000 lawyers statewide).

I have served as an Instructor in the CFP (certificate in financial planning) program at University of California Santa Cruz, teaching the estate planning segment.

Organizations
Silicon Valley Bar Association
Wealth Counsel
Wealth Advisors' Forum
Executive Committee Member, Solo and Small Firm Section of the California State Bar (appointed to a 3 year term by the California State Bar Board of Governors)

Education/Credentials
I received my law degree (J.D.) from University of Denver Law School in 1975. I was admitted to the Colorado Bar in 1975 and to the California Bar in 1977 (NOTE: although I am a member of the Colorado Bar, I am on INACTIVE status there). I earned an M.B.A. in 1982, and I earned a Masters Degree in Taxation Law (LLM) at Golden Gate University Law School in 2010 (with honors).

More at:
http://www.calprobate.com

Awards and Honors
2007, 2008, 2009, 2010, 2011, & 2012 - chosen as a "SuperLawyer" - one of the top 5% of Northern California lawyers practicing in the estate planning and probate area (www.superlawyers.com). Avvo Rating of 10.0/10.0

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