Category Archives: Estate Planning

Planning of estates for newly married couples

One of the first things a newlywed couple in California should do is create or update their estate plans. Taking these steps early might ensure that if unexpected events occur, the remaining spouse will have access to assets in order to pay for final expenses, maintain the family home and care for minor children.

The simplest step to take is to update beneficiary information on financial accounts. Changing the designations to list the spouse on these forms will ensure the money in retirement accounts, life insurance policies and bank accounts is transferred directly to the surviving spouse. Newlyweds should also consider adding a secondary beneficiary in case both spouses perish in an accident.

In addition to updating beneficiaries, newly married couples also need to create or update their will. If the couple has children together or from previous relationships, it is important to designate a guardian for them in a will. A will can also give directions on how to handle other assets.

Couples may also need to change the titles on their financial accounts and real estate after the wedding. There are a few different options, and the one a couple chooses can have a significant effect on how the assets are handled if one of the owners dies or becomes incapacitated. Advanced medical directives and powers of attorney can give a person control over their own health care decisions and financial matters even if they unable to act for themselves.

An attorney who focuses on estate planning may work with a newlywed couple to help them update or create an estate plan. Doing so might help couples feel secure about their future and plan for the unexpected.

Source: The Motley Fool, “Estate Planning for Newlyweds“, Anna Wroblewska , December 29, 2014

Living wills and health care proxies

California residents may be interested in information about health care decisions as one of the more important aspects of estate planning. While many think of estate planning as dealing mostly with the disposition of a person’s assets upon death, making these health care determinations while still healthy can be vital.

The documents that govern medical care in an estate plan are the health care proxy and the living will. Both of these are important in cases where a person has become incapacitated and cannot make their own health care decisions. The health care proxy gives power of attorney to a third party with regard to these decisions. This generally applies when the person is unable to communicate or is not in the proper mental state to make these important decisions. Usually, one person is named, but successors can also be named in the document when that original person is not available to perform their duties.

A living will, on the other hand, is a document which gives medical care directives with regard to end-of-life decisions. The types of things covered are the use of life-saving machines and techniques, such as a heart-lung machine or tube feeding. Without these procedures, the person would die. Having this document will allow doctors to either make use of the procedures to prolong the person’s life or to prevent their use, if the person so chooses. The living will is important when the person is terminally ill and incapacitated.

Determining the appropriate estate planning documents can be difficult without the help of an attorney. The attorney can assess a client’s situation, both financial and personal, and determine and then prepare the specific documents that will be appropriate.

Source: American Bar Association , “Living Wills, Health Care Proxies, & Advance Health Care Directives“, December 15, 2014

The benefits of a trust in estate planning

As California residents address their estate planning options, the question of whether or not a trust is beneficial is common. The concept may seem extreme or inappropriate to those who don’t have a high net worth, but trusts may be equally beneficial to someone whose net worth is a minimum of $100,000 if certain additional conditions are true.

Real estate, businesses, and art collections may be best handled through trusts. A trust can also be beneficial for managing the manner in which payments are made after one’s death. For example, a trust might be structured to support a surviving spouse while leaving the majority of one’s estate to heirs after that individual dies. A trust might be structured to allow partial payments to heirs at various points in life such as reaching an age of majority or completing a college education. A trust is an excellent option for someone who wants to be able to support a surviving loved one who is disabled so that there isn’t an impact on that person’s eligibility for government assistance.

Tax implications associated with an inheritance can be significant, making a trust an option for limiting the tax consequences after an individual dies. Trusts can also minimize the cost and time that would otherwise be spent to deal with probate. Assets tend to be less vulnerable to creditors when included in a trust as well. It is important to note that in order to protect assets, they must be titled in the name of a trust.

Those who are unsure of whether trusts are appropriate may want to begin by formulating goals for the management and distribution of their estate upon their death. An estate planning attorney can be helpful in providing direction for the most appropriate options based on these goals.

Source: CNN Money, “Estate planning: Is a trust beneficial?“, December 02, 2014

Contesting a California will

When a person dies, his or her will will be administered as written through the probate court in most cases. Courts generally presume that a written will is a valid statement of what the testator wished to happen. Judges will usually strictly follow wills unless an interested person is able to overcome the presumption of the will’s validity.

People may be able to successfully challenge a will in several situations. If they are able to prove to the court that the testator lacked testamentary capacity by being insane, senile or under the influence of substances at the time the will was executed, the contesting party may be successful. The same is true if the challenger is able to prove that the person was vulnerable and coerced into leaving his or her property to a manipulator.

The process is commenced by the challenger filing an objection with the court regarding the probate of the will. Upon filing, the court will schedule a hearing and issue a notice and summons. The challenger must then have copies of the objection, notice of the hearing and summons sent to all interested parties. Any party who wishes to answer the objection must file an answer prior to the hearing date. At the hearing, the court will hear evidence and issue its ruling regarding the validity of the contested will.

While it is often difficult to successfully challenge a will, it is possible to do so. People who wish to draft a will that will hopefully withstand a challenge may benefit by meeting with an estate planning attorney. Such an attorney can in some cases represent a client who is questioning the validity of such a document prepared by a family member.

Source: California Law, “Probate Code Section 8250-8254“, November 01, 2014

Celebrity examples for those facing estate planning concerns

While successful celebrities may manage significant assets during their lives, they are just as prone to making bad decisions during the estate planning process as any other California resident. Understanding the implications of each type of estate plan is important, and it is wise to consider scenarios that might affect one’s wishes. Robin Williams’ irrevocable trust is an excellent example. While he may have desired to protect the privacy of his family by establishing an irrevocable trust, the documents became public due to the death of a trustee. The co-trustee was faced with the need to have a new trustee appointed, requiring a petition that involved making related documents public.

Casey Kasem’s health decline led to significant conflict between his adult children and his second wife. The spouse’s challenge over his health directives and Kasem’s designation of a daughter for decisions related to his care led to a long battle. Similar battles may be ahead as the deceased Kasem’s estate is addressed. Meanwhile, the estate of Philip Seymour Hoffman must go through probate due to the fact that he did not marry his children’s mother nor establish trusts. His lack of more appropriate estate planning may leave his partner with large tax bills.

Failing to update an estate plan resulted in Michael Crichton excluding his unborn child from inheriting from his estate at the time of his death. A review of Crichton’s estate plans might have prevented an unpleasant court battle. An individual who is not a celebrity might not need to worry about high-value assets, but family members could be just as negatively affected by a lack of planning.

An individual who is concerned about issues such as publicity, medical decisions, tax liabilities or an unborn child may want to review an existing estate plan with a lawyer practicing in a relevant field. Regularly revisiting a plan may ensure that new life issues may be addressed appropriately.

Source: Forbes, “Lessons Celebrities Can Teach Retirees About Estate Planning“, Thomas and Robert Fross , September 16, 2014

Discussing estate planning

Many individuals might find it difficult to discuss the eventual division and distribution of their estate with their family. However, recent research has suggested that putting off the conversation about wills and trusts can be detrimental. A goal of California estate planning is to remove any doubts about what is going to happen to a person’s assets after death as well as to cover unforeseen events, such as an accident or illness that inhibits one’s ability to make decisions. According to a report from UBS Investor Watch, approximately 50 percent of parents do not discuss.

Without telling heirs what to expect, there may be fights and disagreements, hurt feelings and unanswered questions after a benefactor passes away. Sometimes, parents and other benefactors have good reasons for why they might leave more money to one person than another, yet those reasons are not always clear. Going over a will or the terms of a trust gives heirs the opportunity to question decisions and get answers, limiting misunderstandings.

Talking openly about inheritances also gives parents the chance to voice concerns, such as anxiety about their children relying on their inheritance instead of working hard to support themselves. One way parents might prevent this is to instill a respect for money and self-reliance into their kids from a young age. Overall, although it may be difficult, families are typically happier when beneficiaries are involved in inheritance decisions, according to the UBS report.

A primary benefit of estate planning is to avoid the often stressful and public process of going through the probate courts. Families who feel uncomfortable discussing inheritances amongst themselves will certainly appreciate the privacy afforded to them by creating a solid estate plan. An attorney could assist by establishing trusts, drawing up wills and working to make sure all assets are included in a plan to avoid probate.

Source: NASDAQ, “Expensive Consequences of Not Having the Dreaded Inheritance Conversation Read more: http://www.nasdaq.com/article/expensive-consequences-of-not-having-the-dreaded-inheritance-conversation-cm383319#ixzz3BilApwjc“, Motley Fool, August 23, 2014

Source: NASDAQ, “Expensive Consequences of Not Having the Dreaded Inheritance Conversation Read more: http://www.nasdaq.com/article/expensive-consequences-of-not-having-the-dreaded-inheritance-conversation-cm383319#ixzz3BilApwjc“, Motley Fool, August 23, 2014

Common mistakes that affect estate plans

While many people set out to craft air-tight estate plans to be followed in the event of their passing, the entire process is filled with pitfalls that can limit a plan’s effectiveness. A recent article regarding estate planning discusses some of these mistakes and the different ways that a person might avoid them.

One key mistake is choosing the wrong people when deciding who should carry out the plan. A person setting out their plans for their estate should make sure that the chosen executor is mentally and emotionally capable of making the more difficult decisions that are included in his or her duties. It is also important to keep beneficiary information in both the estate plan and in IRA, 401k, and insurance benefit documents up to date. Checking that information frequently and adding or removing beneficiaries when necessary might the administration of the estate go more smoothly.

It might also be a good idea to select alternate beneficiaries. When these contingent individuals are chosen, it might help ensure that the assets held in the estate are awarded to a person rather than given to the state if the primary recipients are incapable of or unwilling to take any inheritance left to them. In addition, it might be beneficial to confirm that those appointed to execute and benefit from the estate have the best interests of everyone involved at heart. This can help avoid conflict and legal intervention down the road.

While avoiding these mistakes might have a positive influence on the estate planning process, these are only some of the common mistakes that a person might make when drafting a will. An attorney who is familiar with estate planning strategies might be able to help a client build an effective plan.

Source: Investing Daily, “Key Estate Planning Mistakes You Need to Avoid“, Bob Carlson, July 24, 2014

Lou Reed relied on written will to disperse $30 million estate

California residents who were fans of late musician Lou Reed may be interested to learn how the ‘Walk on the Wild Side” singer handled his estate planning. According to a report filed by one of the two co-executors of Reed’s estate, a 34-page will Reed drew up in April 2012 was all the estate planning he had done before he passed.

Because Reed relied on a will rather than a revocable living trust, the details of how Reed’s estate was divided has become public knowledge. While his $30 million estate was dispersed, Reed’s family members were required to go through probate court. The media quickly discovered that Reed’s wife was left with 75 percent of his estate and Reed’s sister was left with 25 percent of his estate.

In addition to becoming public, wills that have to go through probate court can result in added expenses and headaches for a deceased person’s surviving family members. If one family member objects to an aspect of the will, it’s relatively easy to challenge the will in probate court. A revocable living trust, however, will ensure that the contents of an estate are dispersed privately without every beneficiary knowing exactly who got what.

A person who would like the added privacy and security of a revocable living trust may wish to consult an estate planning attorney. The attorney could help design a revocable living trust that will ensure that the person’s estate is dispersed quickly and privately after he or she passes. While writing a comprehensive trust document, the attorney may also be able to help individuals to add detailed conditions and limitations to the dispersal of their assets.

Source: Forbes, “Lou Reed Walked On The Wild Side With His Estate Planning“, July 10, 2014

Review estate plans regularly to keep them current

Estate planning is more than a one-time event in which a person writes a will and gives a power of attorney to a trusted relative or friend. To be most effective, California individuals should review their estate plan on an annual basis to ensure that the decisions they made when they signed the documents are still in line with their current wishes. There are a few times in a person’s life that it is important to review an estate plan and make necessary changes.

An estate plan should always be reviewed when a close family member who was listed as a beneficiary, trustee or representative dies or when someone becomes unable to perform the duties required of them. It’s important to have trusted family members or friends who are willing and able to serve as executor and under a power of attorney.

A person may want to consider revising their estate plan when they get divorced. Failing to revise a health care or financial power of attorney can leave someone’s former spouse or former in-laws in charge of important decisions. By reviewing the documents regularly and especially after important life events, a will and power of attorney designations can remain current.

Taking the time to review these legal forms can ensure that a person’s wishes are carried out as they would have done themselves if they were able. If it is ever necessary to change documents to appoint a new executor or trustee, an attorney who focuses on estate planning may be able to help a client make the adjustments and explain to the newly designated representatives what their role will be in the event the client dies or becomes incapacitated.

Source: Explorer News, “Six reasons to take a fresh look at your estate plan“, June 25, 2014

What are your duties as an executor of a will?

You have been named the executor of someone’s will: now what? You probably have a lot of questions about what you are expected to do and what steps you need to take to get the process started. 

Being the executor of a loved one’s will can be a difficult process, especially since you are still grieving the loss of your loved one. However, the executor is expected to take care of the person’s estate and your duties will start fairly soon after your loved one’s passing.

What exactly is the executor expected to do? The executor of a will has several duties to complete. The executor should become familiar with the person’s will so he or she knows who the listed beneficiaries are and what they will be receiving. 

Some of the main duties the executor will complete include: 

  • Gathering the deceased’s assets
  • Paying any bills
  • Filing any tax returns
  • Distributing assets to beneficiaries

The executor should become familiar with the will so the estate is settled according to the will’s terms. It is the executor’s responsibility to make sure the terms of the will are executed according to their loved one’s wishes. 

Being named the executor of another person’s will can be difficult. There are many decisions and procedures to follow to make sure the will is managed properly. In California, there are specific laws regarding the probate process and how the terms of the will should be managed. 

Executing the will or other estate planning documents can be a complicated process. It may be beneficial to work with an attorney to discuss any legal issues you should be aware of and to make sure the will is being executed according to the estate’s terms. 

Source: The American Bar Association, “Guidelines for Individual Executors & Trustees,” Accessed June 18, 2014