Dangerous Scenario No. 3: “Lack of Long-Term Care Compliance”
The primary goal of long-term care estate planning is to protect, preserve and manage your estate if you are not well. Why is long-term care estate planning so important? Because it allows you to accomplish a number of crucial objectives: Be in a position to maximize your ability to preserve your estate for you and your loved ones in the event of medical crisis. Help ensure that your money and other assets go to the people you choose without the need of your estate going through Probate. Defuse potential conflicts over management of your affairs if you become disabled by ... Read More
Dangerous Scenario No. 2: “Federal Estate Tax Compliance”
There have been significant changes to the Federal Estate and Gift Tax laws. If your documents were prepared under the old system, they may be out of date, and very likely contain overly complicated and unnecessarily burdensome provisions, especially if you are married, or were married at the time your documents were prepared. The good news is that very few estates will be subject to tax liability under the new system of regulations. You should review your plan to determine if it needs to be amended in light of the new estate tax system.
Dangerous Scenario No. 1: “Trust Mills”
Did you purchase a living trust from an organization that you thought was a law firm? Here’s how a “trust mill” works: under the pretext of preparing your estate plan, sales people from these companies obtain your personal financial information in order to use in advancing their hidden agenda: selling inappropriate annuities and other similar investments, most often to senior citizens. According to the California Attorney General: “To give themselves a cloak of legitimacy, these sales agents pretend to be experts in living trusts. In their solicitations, these sales agents often pose as expert financial or estate planners. They pass ... Read More
What is a Last Will?
This is a legal document that takes effect upon death and is used as an instrument to direct the disposition of your property upon death. A Will also serves the critical function of naming guardians for your minor children. In California, wills trigger probate unless the gross value of your "estate" is less than $208,850. When used in conjunction with a living trust, a will (then known as a "pour over will") serves to leave assets not otherwise titled in your trust to your trust to determine the disposition of your property upon death.
How long does a Will remain valid?
A Will remains legally valid unless revoked by its creator.
When would I need to amend my Will?
Your Will should be amended when your situation changes - a birth or death in the family, a need to change your executors, or to change the guardians for minor children are common examples of circumstances triggering the need to amend Wills.
What if I fail to amend my Will after I have another child, get married or divorced?
A California Probate Court may decide guardianship of your new child. If you get married, the California Probate Code would likely modify your plan of distribution to account for the community property rights of your spouse. It is critical that your Will is updated to reflect the changes in your life. Otherwise, your wishes may not be followed.
Can my Will be contested?
There is no key required to gain access to the courthouse. In today's litigious society, there is absolutely no guarantee that your Will or any other estate planning document that you prepare will not be challenged. Your estate is liable for the legal expenses necessary to defend your Will. If you think it is a possibility that your Will may be contested, please let your attorney know. There are several defense mechanisms that can be added to your Will and other estate planning documents to eliminate or minimize this risk.
What happens with my tax-deferred retirement accounts, annuities, life insurance and joint accounts when I die?
Accounts that have beneficiary designations will pass outside of the Probate Court system. These assets will be transferred to the beneficiaries listed. It is critical that you check your beneficiary designations regularly to ensure that these assets will be transferred to the people that you intend. Assets held in Joint Tenancy with another individual will be transferred automatically to that person upon your death, without going through a probate court. However, this can be a very risky and ineffective estate planning device. Please see our discussion "Is joint tenancy an acceptable substitution for a Will or a good way to ... Read More
What happens if you die without a Will?
The Probate Court will decide who will administer your estate and who will become guardian of your minor children. The California Probate Code dictates who gets your money and your belongings. An inappropriate person may be appointed by the court to administer your estate. An inappropriate guardian may be appointed by the court. Children will receive their share when they become "adults", at the age of 18! The beneficiaries may not be those you would have selected if you had been prepared and had completed your own estate plan.
Why is a “homemade” (handwritten) Will dangerous?
Handwritten Wills are easily challenged because of unclear (non-legal) language and often lack witnesses to prove the person writing the Will was legally competent. Lawsuits challenging this type of Will are expensive and usually result in a compromise, with beneficiaries you wanted to disinherit receiving part of your estate.
Is joint tenancy an acceptable substitution for a Will or a good way to avoid probate?
If a couple is married or part of a domestic partnership, holding assets in joint tenancy is acceptable, but far from ideal. Married couples living in a community property state (such as California) can obtain a "double step-up in basis" (HUGE Tax Benefit), but most people fail to take advantage of this tremendous tax benefit by keeping assets in joint tenancy. However, adding anyone else (besides your spouse or domestic partner) as a joint tenant can create other problems, such as: The new joint owner could misappropriate the asset. After all, you gave it to them. Did you file a ... Read More
