Welcome to our Frequently Asked Questions page. This page is different than most other law firm FAQ pages in that the questions and answers presented are not related to general questions such as ‘What is a Will?’ or ‘What is a limited liability company?. Answers to those questions can be found on other pages of this website or through independent research.
Rather, the questions listed here are those that we get directly from people or businesses when we are networking or just in general conversation; in other words, real life answers to real life questions. We hope you find this page useful and informative.
1. Why do I need an Estate Plan?
Actually, you already have an estate plan. It’s just that if you don’t make one for yourself, the State, be it Washington (Revised Code of Washington 11.04) or Oregon (Oregon Revised Statutes 112.015 – 112.115) has a plan made up for you. And, you may not like the result, either by assets going to someone you don’t want to have them, or having someone you don’t trust (it could actually be the State or a creditor) manage the affairs of your estate.
So take the initiative and implement your own estate plan to ensure that the unknown doesn’t happen.
2. What is the difference between a Last Will and Testament and a Revocable Living Trust?
They both accomplish the same purpose – passing your assets to your designated beneficiaries by people you trust. However, with a Will, your estate will have to go through probate which is a court-guided procedure to ensure that your wishes are followed after your death. While probate isn’t “bad”, it can be time-consuming and there could be a gap in time where your estate is in limbo from the date of your death to the time your personal representative / executor is appointed by the court. Further, in states like California, probate can be expensive because the executor is paid a fee to manage the estate with the fee based on a percentage of the total value of the estate.
With a revocable living trust, you avoid probate provide you transfer all of your assets into the trust (called “funding the trust”). I like to think of it as “pre-paying your probate”. While you incur a greater cost now, you maintain control of your assets as trustee and you also control the process. And, you avoid the “hiccup” of not having anyone in a position to manage your estate from the time of your death until appointment of the personal representative.
3. Why do I not recommend sole proprietorships?
The main reason is that they don’t provide any liability protection for your personal assets from claims against your business – everything is exposed. And, it works both ways: your business assets aren’t protected against claims against you personally. Of course, in order to get this protection, not only do you need to set an limited liability entity like an LLC or corporation, you have to know how to run it legally / lawfully; otherwise, the entity is just a piece of paper and is deemed to be an alter ego of yourself.