Tuesday, July 19, 2011
When a spouse dies
So today I have to go to court for a hearing to appoint my client as administrator of his wife's estate. Why? Because they had no plannin other than joint tenancy and the wife had received a large inheritance before death that was never deposited into thei joint account. This was therefore her separate property and therefore does not just pass outright to her husband. Now we need to open a probate and the money will be shared by husband and their two kids.
Friday, June 17, 2011
What are you waiting for?
When I meet with a client for the first times, one of the very first questions I ask them is why they wanted to meet with me and why are they coming in for estate planning now. I constantly hear people tell me they have been putting it off and putting it off and putting it off. But what is it that finally brings them in. It's typically one of four reasons:
• Travel.
• Hospitalization or terminal medical diagnosis
• Change in family status (marriage, divorce, death, birth of a child)
Many of the reasons that cause people to stop procrastinating and get things in order is when they are forced to face their own mortality. For many, once we begin to come to terms with the inevitable, we begin taking those steps to prepare and protect our loved ones.
Without some "push" we can easily find an excuse to put this on the "to do" list but never get it done. Here are some common excuses:
• Travel.
• Hospitalization or terminal medical diagnosis
• Change in family status (marriage, divorce, death, birth of a child)
Many of the reasons that cause people to stop procrastinating and get things in order is when they are forced to face their own mortality. For many, once we begin to come to terms with the inevitable, we begin taking those steps to prepare and protect our loved ones.
Without some "push" we can easily find an excuse to put this on the "to do" list but never get it done. Here are some common excuses:
- I/We don't have time
- I/We can't get all the paperwork together
- I/We don't have the money
- I/We need help from a family member and that person is just too busy
- I/We don't have much and therefore don't need anything
- Don't know anyone who I would want to have raise my kids if something happens to us
- Don't have the money, and for many superstitious people....
- If we do it (write a will, buy life insurance, etc.) something bad will happen to us
- Time: It may take a few hours now, but it will take your loved one years later if you don't
- A small investment now will same your estates tens of thousands later
- Everyone need some planning - unless you want someone else to make your decisions for you.... like the State and a Judge.
- If you don't pick someone to raise your children if you can't, the State and a Judge will decide for you.
- If you do it or don't do it.... we are all going to die someday. Being prepared will only make it easier for your loved ones to grieve since there will be a lot less hassle.
Thursday, June 16, 2011
Friday, April 22, 2011
4 Tips to Reduce the Potential for Will and Trust Disputes:
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.
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.
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.
Tuesday, March 1, 2011
Unmarried Couples – What they need to know to protect themselves and their estates:
There are many unique issues facing unmarried couples. Just because two people chose not to marry, or may not have the legal right to marry, does not mean they are without options to protect each other with their estate planning.
As California does not recognize common law marriage nor same sex marriages, these couples do not have the same protections as legally married couples. Their partner is not considered a “next of kin” when it comes to health care, they are not a legal “heir” under the probate code, and there could be issues regarding child custody rights. Therefore, it is very important for couples to understand what their legal status as a couple is and what legal implications that may have on them.
One way cohabitating couples can protect themselves is through agreements such as Domestic Partnership or Cohabitation Agreements which act like a Prenuptial Agreement (but without the “nuptial” part). These documents clarify ownership of co-owned property, use of property, handling of debts, etc. Additionally, Wills, Trusts, Powers of Attorney, and Advance Directives are other extremely important estate planning documents that will allow couples to name who will manage their financial affairs and health care when they are no longer able to, and how their estate will be distributed after death. Children bring up a whole set of other issues, since custody and parenting rights can’t be contracted. As a result, nominations of guardianship in Wills are incredibly important.
Remember, estate plans aren’t for you; they’re for the people who depend on you. So if the law doesn’t provide you protection for each other, you need to create it through agreements and estate planning documents.
As California does not recognize common law marriage nor same sex marriages, these couples do not have the same protections as legally married couples. Their partner is not considered a “next of kin” when it comes to health care, they are not a legal “heir” under the probate code, and there could be issues regarding child custody rights. Therefore, it is very important for couples to understand what their legal status as a couple is and what legal implications that may have on them.
One way cohabitating couples can protect themselves is through agreements such as Domestic Partnership or Cohabitation Agreements which act like a Prenuptial Agreement (but without the “nuptial” part). These documents clarify ownership of co-owned property, use of property, handling of debts, etc. Additionally, Wills, Trusts, Powers of Attorney, and Advance Directives are other extremely important estate planning documents that will allow couples to name who will manage their financial affairs and health care when they are no longer able to, and how their estate will be distributed after death. Children bring up a whole set of other issues, since custody and parenting rights can’t be contracted. As a result, nominations of guardianship in Wills are incredibly important.
Remember, estate plans aren’t for you; they’re for the people who depend on you. So if the law doesn’t provide you protection for each other, you need to create it through agreements and estate planning documents.
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.
Wednesday, January 26, 2011
A Gift Isn't Always A Gift
If you as a parent give a substantial amount of money to one of your children, it is important for the parents to decide how they want to treat that money. First, if you decide it is a loan, it is important to have a proper promissory note drawn up and terms of payment. It is also important to determine what will happen if the loan is not repaid. For example, do you want the loan to be forgiven if you die, or should the unpaid balance be deducted from that child's inheritance.
But what if you decide to treat the amount as a gift. If you have more than one child, it is very important to understand and document how you want to address this gift. If the other siblings discover a gift was made to one of them but not all of them, it could create some resentment or fighting after both of the parents have passed away.
When making a gift to a child, you need to decide if this is an outright gift with no bearing on future inheritance, or rather, do you want the gift to be considered an "advance" of future inheritance. In this case, the gifted amount would be deducted from that child's share of their inheritance at the time they are to receive their inheritance.
So in simple terms, if you chose to treat the amount given as a "gift", you will need to do one of the following (depending on your wishes):
1) Intend to provide disproportionate amounts to your children through gift and inheritance
2) Gift equalizing amounts to all siblings (be sure to understand any tax implication of your gifting)
3) Consider the gift an advance on inheritance.
Whichever option you choose, you should be sure to document, document, document - either with an update to your will and/or trust, in other writing, or through documented action. If you don't, there will most likely be a a great deal of fighting and frustration among your children after you have passed away.
But what if you decide to treat the amount as a gift. If you have more than one child, it is very important to understand and document how you want to address this gift. If the other siblings discover a gift was made to one of them but not all of them, it could create some resentment or fighting after both of the parents have passed away.
When making a gift to a child, you need to decide if this is an outright gift with no bearing on future inheritance, or rather, do you want the gift to be considered an "advance" of future inheritance. In this case, the gifted amount would be deducted from that child's share of their inheritance at the time they are to receive their inheritance.
So in simple terms, if you chose to treat the amount given as a "gift", you will need to do one of the following (depending on your wishes):
1) Intend to provide disproportionate amounts to your children through gift and inheritance
2) Gift equalizing amounts to all siblings (be sure to understand any tax implication of your gifting)
3) Consider the gift an advance on inheritance.
Whichever option you choose, you should be sure to document, document, document - either with an update to your will and/or trust, in other writing, or through documented action. If you don't, there will most likely be a a great deal of fighting and frustration among your children after you have passed away.
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. 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.
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