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 Estate Planning
By
Ziad Rawashdeh, CPA
Attorney at Law

Phone 909-393-0660
Fax 909-393-0430
Email ziad@zrawa.com Website: www.zrawa.com
Presentation Objectives &
Road Map
• Summary of California Estate
Planning law
• Estate Planning Common Tools
Explanation
• Comparison of these Tools
• Why California Residence need
Estate planning
• Example to understand the big
picture
• Open questions & answers
 What is estate planning?
The biggest misconception:
• Many people mistakenly think that
estate planning only involves the
writing of a will
• A will is part of the planning
process, but you need other
documents to fully address your estate
planning needs. Such as:
 Revocable Living Trust
 Durable Power of Attorney for assets(For each
Spouse)
 Durable Power of Attorney health care (For each
Spouse)
Good Estate planning
process involves
• People: you, your family, other individuals
and, sometimes, charitable organizations
of your choice.
• Your assets: properties with all forms of
ownership.
• Your future needs: in case you ever
become unable to care for yourself.
 Who needs estate planning?
Everyone needs estate planning, whether your
estate is large or small.
A small estate the plan may focus on:
• How and who will managed your assets for your
benefit during your lifetime if you ever become unable
to manage them yourself.
• Under what circumstances it makes sense to
distribute your assets during your lifetime.
• How and by whom your personal care and health
care decisions will be made during your lifetime if you
become unable to care for yourself.
• How and to whom your assets will be distributed
after your death.
• Who will be the guardian of your minor children when
What are assets included in
your estate?
• Includes all of your assets, held in
your name alone or jointly with
others at fair market Value
• Like:
Bank accounts
Real estate
Stocks and bonds
Furniture
Retirement Accounts
Life insurance cars and jewelry.
 Common Statistics:
The ironic thing is that most clients think
their estate plans are set up correctly. In
fact:
• One or two out of ten do NOT even have a
simple will.
• Nine or ten out of ten do NOT have Durable
Powers of Attorney.
• Five to Six out of ten do NOT have Trusts A & B
for estate tax planning.
• Nine or ten out of ten do NOT have a Family
Limited Liability Company or Family Limited
Partnership.
• Seven or eight out of ten do NOT have an
What Happens if you Die
(Intestate) Without A Will?

• California law applicable by default,

• Distribution according California law &

may be inconsistent with your
wishes

• The Estate will be distributed through

probate

• Court will appoint guardian for minor

children
What is Probate?
It is a court-supervised process for
transferring a deceased person’s
assets to his heirs.

• Involves Court: Absent of a will, the

court would appoint an administrator
to handle your estate.
• No Privacy: Your estate & its value
will become a public record.
• Expensive: Lawyer’s fees &
executor’s commissions are based on
a statutory fee schedule, 6-8%
 What a Will Does?
• Your assets will be distributed
according to you wish not according
State law
• Choose individuals or charitable
organizations who will receive your
assets after your death.
• Nominates an executor who will be
appointed by the probate court to
manage your estate, pay your debts
and taxes; and distribute your estate
according to the instructions.
• Nominates guardians for your minor
 Living Trust
A trust is a legal arrangement in which the
grantor transfers control of his or her
property to a trust, which is managed by a
trustee.
What does a Revocable Living
Trust Do?

Avoid Probate While Maintaining

Total Management & Control of
Assets with a living trust
Assets are put into the trust and most
people name themselves as the trustee
in charge of managing their living trust’s
assets. By naming yourself as trustee,
you can remain in control of the
assets during your lifetime.

A successor trustee administered for your

benefit during your lifetime and
transferred to your beneficiaries when
 The difference between a
Revocable Living Trust & a Will
Livin
Description g Will
Trust
Avoid Probate YES NO
YES NO
No Court involved
YES NO
Eliminates the requirement of public notices

Your estate plan private and the records do not become public YES NO
YES NO
Provides for assets management if you are unable to manage
YES NO
assets
Avoids due to health
proving problems
incompetency in a court proceeding
YES YES
Allows for optimum tax planning, yet requires NO extra tax
YES YES
returns or filings
Management & control your own assets & NO management
YES YES
fees required
Nominates a guardian to supervise & care for your minor
YES NO
children
Children Trust: can be held and administered for the benefit of
YES NO
minor childTrust:
Support until they
canare
beolder
held and administered for the benefit
disabled YES YES
You can revoke or change any terms any time as long as you
are still competent
What happens if you become unable
to care for yourself?
You can choose those who will care for you, your estate and
health if you ever become unable to do so for yourself by
making your own arrangements in advance.
Durable Power of Attorney Directive/durable power of
Assets Management attorney for health
• Trustee of a living trust, • Attorney-in-fact makes
provides the necessary health care decisions for
management of all assets you if you ever become
held in trust. unable to make such
decisions.
• Agent or attorney-in-fact in
• This legal document should
a durable power of
contain your wishes
attorney for property
concerning matters such
management handles
as:
limited financial
transactions and deals • All health care issues
assets that may not have • Organ donation
been transferred to your • Funeral
living trust.
 EXAMPLE
John & Mary are husband & wife., with 2 children Sara 2 yrs and
Alex. 5 yrs They own;
Market Equity
Property
Value Owned
Home 950,000 300,000
Rental 800,000 100,000
Small Business 450,000 350,000
401K John 100,000 75,000
401K Mary 100,000 75,000
Life Insurance John 750,000 500,000
Life Insurance Mary 750,000 500,000
Let us assume that John & Mary had an accident
TOTAL 2,000,000in 2011
and John dies, Mary Dies one month later. The whole
world (friends, neighbors, and Relatives) knows that
John and Mary wanted to give everything they have to
their children Sara and Alex.
John & Mary did nothing, die (Intestate)
without a will
 John & Mary have a Will
only:

The result same as scenario 1

except:

1- Estate properties will be

distributed according to John
& Mary’s Will

2- Sara & Alex’s guardian will

according to their Will
 John & Mary have an Estate
Plan
During John & Mary life:

All assets funded to a Revocable living

trust

* For the benefits of John & Mary

* Full management & control by John &

Mary
 John & Mary have an Estate
Plan
When John dies
• Distribution of John’s share Bypass
Trust to May & the children
benefits
• Distribution of Mary’s own share to
Marital trust to her benefit
• Management & control by Mary &
adult children
 John & Mary have an Estate
Plan
When Mary dies
• Estate will be funded in trust to the
benefit of Alex & Sara’s benefits
• Management & control by Alex & Sara
if they are adults
• If Alex & Sara minors; management &
control by a trusted person or
Corporate Trustee
• Alex & Sara’s guardian will be named
by parents
• Estate Passes to Children with NO
ESTATE TAXES
 John & Mary have an Estate
Plan
What about the estate taxes?
2,000,000
Estate’s Value
John dies on Mary dies on
4/1/2011 12/1/2011

TRUST A: 1,000,000 John’s TRUST B: 1,000,000 Mary’s

exemption passes to trust A & exemption passes to Sara &
held for Mary’s use for life then Alex on Mary’s death
to Sara & Alex

Summary: at Joe’s death 1,000,000 poured in trust A to utilize his

estate tax exemption, & at Mary’s death her 1,000,000 poured in trust
B to utilize her estate tax exemption,

The result the entire estate pass with no taxes

If your Estate Value is more
than 2,000,000

• Definitely; you need special

planning, please call the office
at 909-393-0660
Why trust avoid probate?
• Because the property is re-titled
to the trustee before the death of
the trustor
• In case of a Will the title stay in
the deceased spouse name
 Why Do You Need to have a
Plan
• Protect your children by naming their
guardian not allowing the court to
appoint their guardian.
• Protect your assets & be sure they
are not going to unwanted person
• You worked very hard to make your
assets, let them go to your beloved
ones
• Legally avoid Estate Taxes like any
other wealthy American
• Name a trusted person to make your
personal & health decisions if you are
Contact information

5843 Pine Ave. Chino Hills Ca

91709
Phone: 909-393-0660
Fax: 909-393-0430
Email: ziad@zrawa.com
Internet: www.zrawa.com