In past blog posts, we discussed the important duties individuals have when chosen to be a trustee. Trustees of a special needs trust (SNT) share these same responsibilities, but they also have additional duties to meet the needs of the beneficiary of an SNT.

For example, the trustee of an SNT must ensure that their loved one – the beneficiary of the SNT – remains eligible to receive the public benefits they depend on. After all, the purpose of the SNT is to supplement these benefits, not replace them.

So, what steps can trustees take to protect their loved one’s eligibility for benefits?

Public benefits have specific requirements individuals must meet

Individuals with special needs can obtain essential public benefits, including Supplemental Security Income (SSI) and Medicaid, to support their needs. However, these are also two complex systems.

For instance, the Social Security Administration requires individuals to meet certain criteria to qualify for SSI benefits. One of the factors is that individuals earn a limited income. If beneficiaries were to receive or use assets from an SNT directly, it might disqualify them from getting the benefits they need.

That is why trustees are responsible for handling the funds from the trust on behalf and for the benefit of the beneficiary.

Trustees must understand SSI and Medicaid regulations

It is also up to the trustee to ensure the beneficiary of an SNT continually meets the other criteria of these benefit programs, so they continue to receive benefits. Therefore, the trustee must:

• Learn the regulations of both these systems;
• Understand how these programs work; and
• Distribute the assets of the trust accordingly.

Trustees will have to report to both Social Security and Medicaid about their loved one’s income and eligibility. Therefore, they must be well-versed in how these systems work.

SNTs often have instructions to protect the beneficiary’s eligibility. And trustees can also obtain assistance from an experienced California attorney to protect the rights of the beneficiary.

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It is true for almost everyone that their retirement is one of the largest assets they own. Throughout your entire career, you contribute a portion of your income to your retirement.

Nowadays, many people worry they might not have enough saved to last their retirement. On the other hand, some might worry about what will happen to all the assets they saved if they do not use it all before they pass away.

This might lead you to wonder what will happen to your retirement funds in the probate process.

Retirement assets may not have to go through probate

Contrary to popular belief, not all of your assets will have to go through the probate process. Only specific assets are included in the probate estate, for example:

• Most real estate properties and vehicles;
• Business interests or stocks;
• Bank accounts; and
• Tangible personal property, such as artwork or furniture.

However, there are several non-probate assets as well that operate based on beneficiaries. Retirement benefits fall into that category.

Beneficiary designations take precedence over wills

Many retirement benefits specifically include a beneficiary designation. It is built into the benefits program that the assets will be transferred to the listed beneficiaries upon the death of the individual. This process usually applies to:

• 401(k)s and 403(b)s;
• Pensions;
• Independent retirement accounts (IRAs);
• Life insurance plans;
• Payable-on-death accounts; and
• Real properties with a “Transfer on Death” Deed or held in joint tenancy with a living survivor.

In the probate court, beneficiary designations trump any wishes in a will. For example, if someone states in their will that a disinherited child should not receive any retirement assets, that child might still obtain those assets if the individual does not change their beneficiary designations on the retirement account itself.

If there are no beneficiary designations, or if your designated beneficiary dies before you, then your retirement account may become subject to the lengthy probate process.

This is why it is critical for you and your family to understand which of your assets are non-probate assets. And you must ensure your beneficiary designations are in line with your wishes. That way, your family can avoid running into confusion and complex issues in the probate process.

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Losing a spouse is a heart-breaking, traumatic experience. When you depend on your life partner for years, it is a great shock to face the idea of a future without them.

On top of that grief, you also have to deal with the confusing and often overwhelming probate process. This process can be even more confusing if your spouse passed away without making a will. Then you might wonder: how will you divide your spouse’s possessions without a will?

How you owned your property matters

The property you shared with your spouse, including your home, pieces of jewelry and family heirlooms, holds many good memories for you. It is natural to worry about keeping this sentimental property after your spouse passes away. You might also worry about the valuable property and finances your spouse left behind, and how that impacts your financial situation.

So, what happens to the property your spouse owned, as well as the property you shared after they pass away? If they did not make a will, then their property and estate will be distributed through intestate succession.

In these cases, under California law, how you distribute property often depends entirely on how you owned the property:

1. Community property: In intestate succession, you will almost always obtain your spouse’s portion of the community property you shared. This includes a wide range of assets, including your home, their income, any business investments they owned and other assets you acquired during your marriage.
2. Separate property: Although you usually are the first to inherit assets from your spouse, other family members may have the right to inherit your spouse’s separate property as well. For example, if you and your spouse had two children, then the separate property might be divided equally between the three of you.

Understanding how community and separate property work in intestate succession is important to help you through this stressful process. However, this is only a brief overview. Intestate succession is often more complicated than it seems.

It is often beneficial to consult an experienced attorney to understand the process, help you and your family move forward with confidence and protect your spouse’s wishes.

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Dementia is a heartbreaking disease for individuals and their families to grapple with. It can make the future suddenly seem uncertain. The future might seem even more overwhelming if your parent does not have an estate plan set up.

In the United States, roughly five million people are living with dementia. However, more than half of people over 55 do not have the estate planning essentials they need in place. If your parent falls in these categories, you may begin to worry about how your parent’s dementia will impact their ability to make a will.

Can they still make a valid will?

The biggest concern that you might have is whether your parent can still create a valid will. After all, in California, you must be at least 18 and of sound mind to create a will.

The standard of a sound mind, or testamentary capacity, requires your parent to remember and understand:

1. What they are doing by creating a will;
2. The nature of their property and assets;
3. The relationship they have with all relatives included in their will.

Dementia does not necessarily take away this capacity immediately. In many cases, the early stages of dementia impact short-term memory first. Your parent might be forgetful and lose items frequently, but that does not mean they do not understand the three elements listed above. Therefore, someone with dementia may still have capacity to create a valid will.

How can you help your parent plan for the future?

Even if your parent still has the mental capacity to create a valid will, they might still need assistance. You can help by:

• Asking your parent about their wishes, listening and taking detailed notes;
• Helping them make an inventory of their assets;
• Approaching the conversation carefully, especially since dementia can cause irritability; and
• Encouraging your parent to speak with an attorney, who can help your parent craft an effective estate plan to protect your parent’s wishes.

The only thing you must remember is that you cannot serve as a witness when your parent signs their will if you are a beneficiary.

Be aware of the risks

Someone in the early stages of dementia can often still create a valid will. However, you should be aware that this could increase the chances of someone contesting your parent’s will during the probate process.

That is why it is a good idea to make sure everyone in your family – and all of the beneficiaries of your parent’s will – are on the same page. Keep them updated about your parent’s condition and discuss the will and estate plan with them too. Being open with the family during this tough time can help things go a lot smoother in the future.

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It can be an honor if a loved one named you as the executor of their will, also referred to as a personal representative. It means they trust you to handle their most important affairs and carry out their wishes.

However, acting as an executor is often a tough and time-consuming responsibility to take on. You may want to help fulfill your loved one’s wishes, but you may not have the time or ability to do so.

What should you do in this situation?

Why might someone choose not to be an executor?

There are several reasons you may not wish to take on this role, including:

• You have young children, and the responsibilities of being a good executor would interfere with those of being a parent;
• You live far away, and administering the estate and managing probate would require extensive travel;
• You are a caregiver for an ill family member, and do not have the time to handle complex probate matters on top of caring for a loved one; or
• You do not feel prepared or confident to take on this role.

How can you turn down the role?

Simply being named as an executor in a loved one’s will does not automatically make you one. You have the option to decline to serve.

If you decide to decline to serve as an executor, you should tell the deceased loved one’s family your decision. This gives them notice that things will change and allows them to discuss how they want to move forward.

Then, you may also need to inform the probate court in writing. To officially appoint the personal representative, the court must determine if the named individual is:

1. Capable of administering the estate properly and fulfilling the duties of a personal representative; and
2. Willing to accept the roles and responsibilities of a personal representative.

This is when you have the chance to explain that you do not wish to be the executor. However, this is not your only chance. It is important to note that you can still resign from this role even in the middle of probate, though the process will change slightly.

Who will the personal representative be then?

If your loved one’s will names a back-up executor, then the next named person will likely be appointed to administer the estate. However, if there is not a back-up, then the California Probate Code determines who has the next priority to be the personal representative.

Many people might worry that they are letting their loved one or family down by turning down this role, but that is not true. An executor must act in accordance with the deceased loved one’s wishes as provided in their will and in a prudent manner. Turning down the role when you know you cannot fulfill the duties properly is being responsible and putting your loved one’s wishes first.

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In 2018, people across the country grieved the loss of the late, great Aretha Franklin. Franklin’s name returned to the headlines in 2019, however, when three handwritten wills were found in her home and filed in a Michigan probate court.

The discovery of these three wills only created more complex issues for the probate of Franklin’s estate, and the probate is still open today. These issues are not unique to Franklin’s estate. Multiple wills could create several challenges for any family during probate, and it could put your loved one’s estate – as well as their wishes – in jeopardy.

Why would your loved one have multiple wills?

These situations are rare, but there are a few reasons a loved one might leave behind multiple wills, including:

• They made two wills because they owned property in two different states, which requires probate in both states;
• They were under undue influence to create a new will, and they lacked testamentary capacity;
• They updated their will or wrote a new one, but did not properly revoke or destroy the old will; or
• They wished to supplement their will with new instructions.

Regardless of the reason, the existence of multiple wills often only serves to create confusion and disputes between family members – especially if they inherit more in one will than they do in another. These disputes could potentially lead to complex litigation.

The main issue: Which will is valid?

Arguments are not the only issue that families could face if a loved one leaves behind multiple wills. The primary issue is determining which will is the correct one, and which one accurately reflects your loved one’s wishes.

Generally, California courts accept the most recent will as legitimate as long as it meets the requirements of a valid will. That is because a new will generally revokes an old one, even if it does not include a clause that revokes any previous wills.

However, the court might also determine an older will is the valid will, especially if:

• There is proof of undue influence or duress regarding the new will;
• There is proof that the new will is forged;
• There is proof that your loved one was not of sound mind when they created the new will; or
• If the new will simply does not meet the requirements under California law.

Another obstacle that families could face is time. The probate process can already be quite time-consuming and determining the validity of one will out of many could take even more time. In these situations, it is often beneficial to consult an experienced attorney to determine how you can move forward while protecting your future and your loved one’s memory.

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Parents who welcome children into the world usually have quite a bit on their hands. They need to adjust their life to accommodate their new child, which includes taking a look at their future. Many new parents would rather not think about what could happen if they are no longer there to care for their child, but it is essential for both parents – as well as potential guardians – to be prepared.

So, what if you are asked to be the guardian of a loved one’s child?

Becoming a guardian is a great responsibility

Essentially, the guardian of the person would take over the duties and responsibilities of the parent. This would only be necessary if both parents:

• Pass away;
• Become incapacitated;
• Are unable or unsuitable to care for the child in any way; or
• Voluntarily request the appointment of a guardian.

It is rare that both parents would be unable to care for their child. Taking on the responsibility of a guardian is still a significant decision, and you must carefully think through the details before accepting it.

What should you consider before becoming a guardian?

Before agreeing to become a guardian, there are a few questions you should consider, including:

• Are you willing to take on the responsibility? The job of a parent, or a guardian, in this case, is often emotionally and physically stressful. Additionally, you may also have a busy professional life. Do your family and career obligations allow you to take on this role? Will you have the financial resources to support this child? California law requires guardians to complete annual status updates on the child, so you must be able to meet the child’s needs.
• Can you ensure the child’s best interests are met? Being able to meet a child’s needs, including food, shelter and safety, is different than meeting their best interests. Will you have the capacity to provide the child with a secure home, the support they need and continued contact with other family members and friends? Additionally, the loss of a parent (whether that loss is due to death, incarceration or inability) can often have a significant effect on a child’s emotional health. This can sometimes mean a child develops behavioral difficulties in coping with their loss. Do you have the patience and commitment to help the child get the help and support they need, whether through outpatient therapy or inpatient treatment?
• Do your values match the parents’ values? This is generally up to the parents to find a guardian who upholds their same values, but it can also be helpful for potential guardians to re-evaluate their values before becoming a guardian, since becoming a guardian might change one’s current values and goals significantly.
• Will you have the support you need? The adage “it takes a village” to raise a child exists for a reason. If you take on the role of guardian, will you have support from your family and friends if you run into challenges?

It is helpful to think about these questions and discuss them with the parents if they ask you to be the guardian of their child, so both the guardian and the parents are confident that they are making the right decision.

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Nowadays, blended families are the norm. Divorce rates for people over 50 have slowly been increasing in the last two decades, and second marriages are much more common after divorce or the death of a spouse.

However, even as more California families become blended families, many estate planning laws do not recognize the rights of some blended family members unless their rights are explicitly included in their loved one’s plan. This can create several challenges if a parent passes away without updating or preparing their estate plan to protect their children’s, or stepchildren’s, needs.

So, it is important to know: what are your rights as a stepchild?

Stepchildren are not automatically covered under “children”

If someone dies without a will, their estate is subject to California’s intestate succession laws. These laws provide an order of which surviving family members have the right to inherit from their loved one’s estate. Depending on the family’s situation, the order generally follows:

1. Spouses
2. Children
3. Siblings
4. Parents

Unfortunately, stepchildren are not included under the definition of “children” in these laws. This term only refers to biological children or legally adopted children under the law.

Therefore, stepchildren do not share the same inheritance rights as biological or adopted children. In fact, California law states that stepchildren do not inherit until all of the relatives directly related to the stepparent – or relatives descended from the stepparent’s grandparents – receive property. This can even apply if your stepparent inherited your biological parent’s assets upon their passing.

However, there are certain exceptions.

What are the exceptions that give stepchildren inheritance rights?

Of course, stepchildren can inherit from their stepparents if the stepparent includes them in their estate plan. But there is another exception stepchildren should know.

In 1985, state lawmakers passed a law that provided stepchildren the right to inherit during intestate succession if:

• The relationship between the stepchild and the stepparent began when the stepchild was still very young, and they continued that relationship throughout their lifetimes; and
• The stepparent intended to adopt the stepchild but faced legal challenges, such as pushback from the child’s other biological parent.

You must be able to prove that both of these factors are true to inherit anything from your stepparent.

As a stepchild, you may feel that you should have as much of a right to inherit as any other child, but these situations that are often already overwhelmed with grief can quickly become complicated for children of blended families. However, knowing about these challenges beforehand can help you and your family prepare for them and plan accordingly.

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An estate plan allows individuals to make their wishes clear and provide for their family when they are gone. However, a lot of financial planning goes into this process to ensure one’s family members will be protected and provided for after their passing.

This is essential because, unfortunately, financial responsibilities do not disappear – even after someone passes away. And if a loved one does not set aside money to handle these financial responsibilities, their surviving family members might not receive anything from their lost loved one.

Too much debt can make an estate insolvent

Before anything from a loved one’s estate can be distributed among beneficiaries, there are two steps the probate court and the personal representative must complete under California law:

1. They must appraise the probate estate and calculate its value; and
2. Then they must pay off any remaining debts, bills and expenses in the loved one’s name. These debts commonly include expensive medical or nursing home bills for end-of-life care, remaining mortgage payments or other loan payments, credit card balances, and funeral expenses.

If there are not enough assets within the probate estate to pay these debts in full, then the estate is insolvent. This means that beneficiaries will likely not inherit from the estate, despite what their loved one’s will says. On the other hand, if their loved one names beneficiaries in their retirement account or life insurance account, those beneficiaries may still receive assets even if the estate is insolvent.

Is the family liable for these debts?

If creditors do not obtain full payments from an insolvent estate, it is possible they might try to take legal action to recover payments, even if there is nothing left in the estate to cover these debts.

Many beneficiaries – and personal representatives, for that matter – might worry about whether or not they are responsible for paying their loved one’s remaining debts. Thankfully, it is unlikely.

There are some cases where surviving family members could be liable to pay remaining debts, including:

• If the loan is connected to a joint account with a surviving spouse; or
• If someone co-signed the loan with their now passed loved one.

However, beneficiaries are generally not required to pay any debts that the probate estate cannot cover.

Managing the stress of an insolvent estate on top of the grief of losing a loved one can be overwhelming. It is often helpful for families to consult an experienced attorney to ensure they know how to protect their rights and their loved one’s legacy.

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Many articles explaining the probate process, and even this blog, often state just how important it is for personal representatives and surviving family members to create an inventory of their loved one’s property. It is not only necessary for the probate process, but it can also make it much easier for you and your family to navigate probate during the tough time after your loved one’s death.

However, many people still have the question: how do you create an inventory?

An inventory is a list that should include details such as:

1. Descriptions of the assets

The inventory should include a short description of each asset. California law determines that assets generally fall into three categories:

• Real property, which includes real estate or land;
• Tangible property, such as vehicles, heirlooms or furniture; and
• Intangible property, which includes financial accounts or stocks.

It is also helpful if you describe the characteristics and details of the asset. This description does not have to be elaborate. It only has to be enough of a description to identify the asset.

2. Appraisals of the asset’s value

As the personal representative, it is also your responsibility to calculate the values of each asset, to determine the value of the estate at the time of your loved one’s death. This is essential to distribute the assets among heirs and beneficiaries.

Some property, such as your loved one’s home, will have to be appraised. California law outlines the procedure of:

• Which assets must be appraised; and
• How to appraise them.

3. Records of how your loved one owned the property

There are many assets that your loved one may have owned separately or jointly with their spouse. This can change how you distribute assets, so it is critical to determine how your loved one owned each asset in the inventory.

4. Whether there is a debt owed regarding this asset

It is also helpful to determine which assets still have debts tied to them as well. Often, these assets include the home or vehicles.

During the probate process, the personal representative will be in charge of paying off remaining debts in their loved one’s name. Therefore, organizing these loans in the inventory can help make this process easier for your family.

Often, individuals who create a will include an inventory in their estate plan. This can make creating an inventory much easier. However, it is still essential for personal representatives to make their own inventory and determine the value of the estate after their loved one passes.

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