Advise your beneficiaries of your distribution plans, especially when children are being treated unequally. Will contests and litigation arise from disappointed feelings of entitlement. Telling the children ahead of time what their shares will be may avoid a later dispute. (Although it could cause family problems now though so be careful. Sometime writing a “family love letter” to your children to be read after your death, explaining why you set up the distribution plan the way you did may help as well. This will vary from family to family.
Use a Trust - not just a Will. Since trusts can be funded and operate during lifetime, it is difficult to contest on the grounds that the individual was unaware of its terms. When the Trustor of the trust dies, there is no need to begin a court proceeding to "prove" the validity of the trust, like there is for a will.
Use Disinheritance Or No Contest Clause. The goal here is to prevent beneficiaries from causing a legal dispute after someone dies. A lot of trust and estate litigation is not about the validity of the document, but about how it is to be interpreted or how it is being managed. In order to reduce this type of litigation, a disinheritance clause can cause a forfeiture of a beneficiary's interest if such a challenge is made. The entire estate plan must be consistent with this clause.
Use Mediation or Arbitration Provisions in your plan. Arbitration or mediation cannot be used with respect to the challenge of a document's validity unless the parties agree to it. Using a disinheritance clause to cause forfeiture if the parties will not participate can be used. This could stop claims that are filed only to harass other beneficiaries or to delay distributions to others. Another approach would be having the parties enter into a contract agreeing to arbitration before the transfer.
Disclaimer: The information provided is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to your particular issue or problem. Use of this information or any related information does not create an attorney-client relationship between ALVIS FRANTZ AND ASSOCIATES. The opinions expressed at or through this site are the opinions of the individual authors and does not reflect the opinions of any firm or attorney.
Friday, April 22, 2011
Tuesday, April 19, 2011
DIY Trusts and Wills - Why they are not the best option
One of the risks inherent in opting for a do-it-yourself estate plan is that, without the help of an experienced attorney, you can’t spot any missing pieces of the puzzle.
One such puzzle piece is what is called the residuary clause, which is an extremely important part of any will or trust and may be missing in a do it yourself estate plan. A residuary clause gives instructions as to what should happen to property that is not specifically left to someone in other clauses of your will or trust.
For example, if your will or trust states that your home, furniture and cars will go to your spouse, and that your jewelry will go to your daughter, but there is no specific mention as to who will get your boat, your holdhold items, your collectibles and even a bank account, then your residuary clause will control what happens to that property.
In addition, the residuary clause will control what happens to property that you leave to someone but that person dies before you and before you update your will or trust. For instance, if you left your art collection to your niece but she dies before you, then your residuary clause would control who would ultimately inherit the property.
So what happens if you don't have a residuary clause? Any property not left to a specific person or charity would have to be probated and then divided among your heirs at law in the manner provided by the Probate Code of California. The drawbacks to this obviously is the time and expense added to the probate process, and of course, the fact that you and the state of California might not have the same ideas about who should ultimately receive your property.
Working with an experienced estate planning attorney can help ensure that your property makes its way into the hands of its intended recipients. Call us at 925-516-1617 to see if you are property protected.
One such puzzle piece is what is called the residuary clause, which is an extremely important part of any will or trust and may be missing in a do it yourself estate plan. A residuary clause gives instructions as to what should happen to property that is not specifically left to someone in other clauses of your will or trust.
For example, if your will or trust states that your home, furniture and cars will go to your spouse, and that your jewelry will go to your daughter, but there is no specific mention as to who will get your boat, your holdhold items, your collectibles and even a bank account, then your residuary clause will control what happens to that property.
In addition, the residuary clause will control what happens to property that you leave to someone but that person dies before you and before you update your will or trust. For instance, if you left your art collection to your niece but she dies before you, then your residuary clause would control who would ultimately inherit the property.
So what happens if you don't have a residuary clause? Any property not left to a specific person or charity would have to be probated and then divided among your heirs at law in the manner provided by the Probate Code of California. The drawbacks to this obviously is the time and expense added to the probate process, and of course, the fact that you and the state of California might not have the same ideas about who should ultimately receive your property.
Working with an experienced estate planning attorney can help ensure that your property makes its way into the hands of its intended recipients. Call us at 925-516-1617 to see if you are property protected.
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