Tips For Holiday Conversations about Estate Planning

This holiday season, as you gather with your family, is a perfect time to have those important conversations about what happens when someone passes away. One of the biggest causes of trust and probate litigation is as a result of lack of communication and in turn, mistrust and misunderstanding. Important questions to consider this holiday season are:

• What will happen when your parent’s pass away
• Have your parents done a will or trust, when was it last reviewed, and where is it?
• Who are their attorney, accountant, and financial advisor?
Here are some easy-to-use tips and conversation starters.
Tip #1 - Tell a story. When dealing with someone who is reluctant to discuss their plans, try telling them a story about someone you know, heard about, or have read about that had to deal with the struggles of someone’s death when there was no planning. (If you don’t have a story to tell, make one up)

Tip #2 - Just ask if your loved ones have done their estate planning. It doesn’t matter what age someone is, no one is guaranteed a long life. How often do you hear about a young mother or father losing their life? They most often have no plan in place. If your loved ones haven’t done their estate planning, encourage them to do so now.

Tip #3 - Confirm that they done what they said they did. If they have an estate plan, has it been updated recently? Have they transferred their assets into their trust? Having a trust or will alone is great but if it is not done the right way and not updated with new laws and life changes, it may not work as they imagine it will.
Tip #4 - Verify that their plan has been prepared or at least reviewed by an estate planning attorney. Not all attorneys handle estate planning but most will draft up a will for their clients. In addition, there are so many online do-it-yourself legal options out there, but cheaper is not better. Beware of trusts that try to be “one size fits all”. Estate plans are not “one size fits all”, they should be customized for your loved one’s needs.

Tip #5 - Know where they keep their estate plan documents. If no one knows where your family keeps their documents, how is anyone going to find them when they need them? Make sure that your loved ones tell you where those documents are located and that the trustee or executor can access them. Be cautious as well about safe deposit boxes. If you store documents there, be certain that person has access to the key and authorization on file with the bank to access the box.

Divorce and the Family Owned Business

Issues of family law and community property often arise in the course of business legal planning.   Although nobody likes to think about it, divorce happens.   As with many risks, the best way to minimize the potential for problems is a thorough understanding of the law and thoughtful planning.

California defines community property as any property acquired during marriage that is not acquired by gift or inheritance.  Although community property rules are a mainstay of the family law courts, they also are an important issue in the context of a family owned business. These rules apply to spouses as well as registered domestic partners in California

One area where this comes up frequently is the manner in which stock in a Corporation or membership in an LLC is held.  If a couple is incorporating a business or starting an LLC, they must decide how they want to hold title and what their respective ownership rights will be.  Just like with title to real property, corporate stock or LLC memberships can be held in a variety of different forms, each with their own implications.  Each situation and circumstance is unique and calls for a thoughtful decision to be made by the couple.  A consultation with an attorney to discuss how to hold ownership interests in a business can help minimize problems later in the event of a divorce and can also be extremely beneficial with respect to the couples’ estate planning.

No matter how the ownership interests are held, divorce of business owner spouses may be a difficult challenge to overcome.  If the couple is not able to continue to work and run the business together, then the couple may need to sell the business to an outsider or have one spouse or partner keep the business and offset the value with other marital assets.  Both of these latter options require a proper valuation of the business which is often difficult once owners are no longer on the same page.   If the business owners define in advance the methods and manner they will use to value their business, it can reduce valuation and litigation expenses in the future.

Although nobody plans for divorce, it is a reality that must be addressed in business planning for spouses and domestic partners.  Couples entering into business together should understand California’s community property rules and should hold title to the business in a way that best suits their needs.  If you and your spouse own a business or are starting a business, call Alvis Frantz and Associates 925-516-1617 or email info@alvisfrantzlaw.com to schedule a consultation now, to protect for tomorrow. 

Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

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