Having an estate plan is wise for those who want to ensure that their wishes for the dispensation of their assets are carried out after their death. With an estate plan, you can also designate who will make decisions regarding legal, financial and health matters for you if you are unable to do these things for yourself.

Business owners should have a particular interest in having an estate plan in place in order to ensure that their business transfers to the person(s) they choose after death and that it continues to run as they would like regardless of what happens to them.

However, just putting an estate plan in place isn’t enough. Californians need to make sure that their estate plan is current. If, as we all hope, we have many productive years ahead of us after we draft our estate plan, we will likely need to amend it over the years.

Therefore, it’s troubling that a survey of more than 260 entrepreneurs, all successful, found that while nearly all of them have some sort of estate plan (at least a will), 85 percent of their plans were at least 5 years old.

With all of the changes in tax laws, that means that these entrepreneurs’ plans weren’t as tax-efficient as they should be. Of course, that also means that many of them had changes in their families (such as births, marriages and divorces) that their plans don’t reflect. They also don’t reflect changes in wealth since the plans were put into place.

No matter the size of your estate or whether you own a business or not, it’s essential that you review your estate plan regularly and notify your California estate planning attorney whenever you’ve had a change that you think could impact your plan.

Source: Forbes, “Most Successful Entrepreneurs Have Out Of Date Estate Plans,” Russ Alan Prince, accessed Nov. 03, 2017

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When creating an estate plan, there will come a point when you need to think long and hard about whom you name as the executor. While you may have many options, you need to make a final decision at some point.

The first thing you should do is consider the many steps that the executor will need to take upon your passing. Once you do this, you may find that some people are better suited for this task than others.

Taking this one step further, you should do your best to understand the challenges of serving as an executor. By putting yourself in this person’s shoes, it becomes easier to make a decision as to whom you should select.

Here are some of the top challenges of serving as an executor:

• Time commitment
• Gaining access to information and records
• Having enough legal and financial knowledge to make informed decisions
• Managing disagreements among heirs
• Filing tax returns
• Paying debts and bills that were left behind
• Distributing assets according to the estate plan
• Lack of compensation for the time put into the process

As you can see, serving as an executor is not nearly as simple as it sounds. Even in the event of a basic estate, the executor is still staffed with a variety of tasks and responsibilities.

If you are in the process of creating an estate plan and choosing an executor, make a list of people you can trust. From there, begin to narrow your options based on availability, health, personality traits and level of trust.

In the end, the only thing that matters is that you choose the right executor. This will give you peace of mind.

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When you begin considering making a will, you may consider a number of different ways to go about it. Some people choose to simply make wills on their own, many of which meet the requirements needed to hold up in court. However, involving an attorney has a number of benefits you may have yet to consider.

A will can only provide guidance in the areas where you make your wishes known. The reasons you have for creating a will may be perfectly good reasons, but they may also completely ignore areas of interest that you simply don’t know about. Enlisting help from an attorney ensures that you’ll have professional guidance through all of the areas where a will is generally useful, including issues you might otherwise miss entirely.

At the same time, an attorney provides you with a line of protection against a number of threats to your will. On a very practical level, an attorney who guides you through will creation will keep copies of the original will and related documents, which is a useful redundancy protection from losing the originals in a fire or a move, for instance. On a greater scale, if some party or another chooses to contest the will, the attorney is already poised to protect your wishes further.

If you believe that you can benefit from an attorney’s guidance through will creation or estate planning issues, don’t hesitate to schedule a free consultation with a practice. Professional estate planning guidance can help you understand the complete scope of benefits and protections a will can provide, and will walk with you through the entire process.

Source: Lake County Record-Bee, “Importance of original estate planning documents,” Dennis Fordham, Oct. 18, 2017

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A loved one named you as the agent (also known as an attorney-in-fact) for his or her power of attorney (POA). Now the time has come for you to act on your designated responsibilities.

When the person is no longer able to take care of his or her affairs, this role is crucial. That’s why it’s essential to get an agent’s permission before you make that designation and ensure that they understand the responsibilities involved.

Agents named in POAs can have different scopes of responsibility. They may only be responsible for health care or financial decisions, or may be limited to only making real estate transactions. Some agents are responsible for a wide variety of matters.

It’s important for those creating the POAs to try to avoid potential obstacles for the agents who need to exercise the authority they’ve been granted. Third parties aren’t required to accept that person or entity as a valid agent. Below are some common reasons why they may not be accepted.

The POA is too old

When it’s been some time since the POA was executed, banks, brokerages and other companies may be concerned that a newer one exists. Often, they won’t honor a POA that was executed more than five years prior. Some title companies require a POA no older than six months. Agents may also be asked by a third party to sign an affidavit stipulating that they aren’t aware of any termination of the POA or of their authority.

The POA wasn’t properly executed

In California, POAs have to be signed by the person who delegated the authority (the principal). This signature must be done in front of a notary public or two adults with no stake in the POA. If a POA involves property, the assessor’s parcel number and legal description must be included, and a specific description of the agent’s powers should be included, e.g., that they have the right to buy, sell, rent the property, etc.

California law allows third parties to “require the attorney-in-fact to provide identification, specimens of the signatures . . . and any other information reasonably necessary or appropriate to identify the principal and the attorney-in-fact.” However, they must have a good faith reason for not letting an agent carry out a POA. The agent can take the matter to court to compel that party to honor the document.If you have questions or issues involving the authority you’ve been granted by a POA, an experienced California estate planning attorney can provide assistance.

Source: Lake County News, “Estate Planning: Acceptance of powers of attorney,” Dennis Fordham, Oct. 07, 2017

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Recently, we discussed no contest clauses in wills. We noted that when people are found to have a legitimate reason to believe that all or part of a will should be contested, they can challenge it without fear of losing whatever inheritance they were given.

If you want to help ensure that your family and others don’t contest your will, a no contest clause can provide a deterrent. Many people don’t want to risk being left out of an estate altogether, which could happen if their contest isn’t deemed to be legitimate.

However, there are things you can do to assure your family that you drafted your will and other estate documents with full knowledge and understanding of what you were doing, without any undue influence. They might not like the contents of the will, but they will know that this was your decision and that there probably aren’t valid grounds for challenging it.

This means not waiting until you are elderly and/or very sick to create your estate plan. Ideally, you should do it while you’re still of sound mind and body. You can always make changes later if you need to. Estate planning attorneys generally recommend reviewing your estate plan at least annually.

Let your loved ones know what’s in your estate plan. If you’re cutting out one of your children or deciding to leave everything to your favorite charity because you believe your kids are old enough to take care of themselves, let them know. These can be difficult conversations, but if you don’t have them, your family will have all the more reason to suspect that someone influenced you to cut them out.

Another way to avoid a will contest, particularly from someone outside your family, is to use a revocable living trust instead of a will. That’s because a revocable living trust is a private document, while a will is a public one that can be accessed by anyone after it’s been filed in probate court.

Your California estate planning attorney can provide guidance for preventing disputes and contests to your estate plan among your loved ones after you’re gone. He or she can also help you prepare for conversations with your family about the contents of your estate plan.

Source: The Balance, “5 Tips for Avoiding a Will Contest,” Julie Garber, accessed Oct. 11, 2017

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Your great aunt died, and you learn that because you were always her favorite, she left you her home. That may sound like an unexpected bit of good fortune amid the grief of losing a loved one. However, home ownership isn’t all it’s cracked up to be — particularly if the house is old, in disrepair and/or simply not where you want to live.

Before you decide what to do, take a look at the property, particularly if you haven’t seen it in some time. It may no longer be the anything like your childhood memories of it. Then, you need to consider your options.

Make the home your own

If the home is where you want to live, that’s great. Even if it’s paid off, though, remember that you still need to pay property taxes and the other costs that go with home ownership. You may also owe an inheritance tax.

Keep the home and rent it

An inherited home can be a nice source of rental income if you don’t mind being a landlord or paying a management company to handle the job. If property values are rising, keeping it may be a good investment.

Sell the property

There are a couple of options if you decide to sell the it. Many people have an estate sale that includes the home, furniture and other belongings they don’t want. This is often the simplest way to handle inherited properties.

You may decide to fix it up so you can get a higher price. It’s a matter of whether the money and time you spend on repairs and renovations is worth the amount you can get by bumping up the sale price.

Refuse the inheritance

Take a look at what the house is actually worth. If the remaining mortgage is more than the property value, you may not want to deal with it. You are allowed to “disclaim” an inheritance. However, if that’s your decision, notify the executor as soon as possible.

If you’ve inherited a property, whether alone or with others (which can have its own complications), it’s wise to seek legal guidance from an experienced estate planning attorney as well as from real estate, financial and tax professionals to ensure that you’re making the best decision for your future.

Source: Realtor.com, “So You Inherited Property—Now What?,” Lisa Johnson Mandell, accessed Oct. 06, 2017

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Being the executor of a loved one’s estate is no easy task and it’s a very big responsibility. These responsibilities could feel overwhelming to the average California resident, especially if you’ve never served as an executor before.

Consider the following if you’ve been tasked with being the administrator or executor for a deceased loved one’s estate.

5 tips for California executors

Here are five things to consider if you’re an executor:

1. Does the estate have extra funds and assets? It’s not uncommon for an estate to be deficient in funds. There may not be enough money to pay for funeral, memorial and other end-of-life costs. Be sure to consider all of these costs when making funeral arrangements to stay within a reasonable and affordable budget.
2. Create a checking account for the estate. You’ll need to take care of different expenses relating to your loved one’s estate, and to pay for those, you’ll want to have an estate checking account. You will fund the account with money from the estate as it is available to pay for expenses. You can also deposit checks paid to the estate into this account.
3. Can you receive compensation for being the executor? As the executor of the estate, you often have the legal right to take some compensation for your role if the estate has sufficient capital to pay you. You will want to discuss your plans to take a fee with all beneficiaries so they know beforehand.
4. Be wise with your money management. As the executor, you have a fiduciary obligation to save money and act in the best interests of the estate to preserve as much wealth as possible for the beneficiaries. If you make unwise or negligent choices you could be personally financially responsible.
5. Keep detailed records. If you don’t keep detailed records, receipts related to expenses, and notes about conversations, you could find yourself in trouble later on down the road. Document what you do, and you won’t be in danger of appearing dishonest.

Are you the executor of an estate?

Learn as much as you can about California probate and estate administration law to ensure that you perform your executorship duties as well as possible. You may also want to reach out for professional assistance and guidance as you fulfill this vital and important role.

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People often put no-contest clauses in their wills because they don’t want their family members or others fighting over what they see as an unfair division of assets. These clauses may state that anyone who contests a will and tries to invalidate all or part of it is disinherited completely.

This can, understandably, make a family member afraid to contest a will, even if he or she believes that the deceased person was unfairly influenced by someone outside the family. However, if there is probable cause for challenging the will, the no-contest clause won’t be enforced.

What constitutes probable cause? Under California law, if a reasonable person would believe that the information known to the person contesting would make him or her be likely to prevail after further information is brought forward, the person contesting the will has probable cause.

Even if a person contesting a will loses in court, if the contest was considered to have a legitimate legal basis and been brought in good faith, he or she won’t suffer the penalties of a no-contest clause.

Only a couple of types of contests actually trigger the no-contest clause. One involves contending that the decedent had no right to the property he or she transferred in the will. This can occur in community property states like California.

The other involves claims that a decedent owed money to the person contesting the will if the no-contest clause specifies those types of claims.

No-contest clauses aren’t as all-encompassing as many people assume. If you believe that you have a valid reason to contest someone’s will, it’s advisable to talk with a California estate planning attorney who can help you weigh the pros and cons of doing so.

Source: The Press-Enterprise, “Best in Law: The pros and cons of the no-contest clause,” accessed Sep. 28, 2017

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Do you wish you could exert more control over the choices your child made in their lives and as they progress through adulthood? If so, you may find that an incentive trust can help ensure that happens.

These types of trusts have become increasingly popular among estate planning clients in recent years because of their ability to reward beneficiaries for living their lives in a certain way, such as engaging in positive behavioral choices,. The way this type of trust works is that the more the beneficiary lives in alignment with the benefactor’s desires, the more money the trust pays him or her.

When the beneficiary’s parents first draft the directives for the trust, it’s important for them to spell out their philosophy on life. The trustee is the actual one who enforces the parents’ directives and determines whether or not the beneficiary’s behaviors merit receiving a payout from the trust.

One example of a directive a parent may issue for the trustee is to never authorize a distribution that would make it unnecessary or unattractive for the beneficiary to discontinue working to support his or herself. This type provision captures why many financial planning experts liken incentive trusts to earned income. In this instance, a beneficiary is incentivized for making more money independent of the trust.

This type of trust has become increasingly popular in recent years as more parents of means are looking to ensure that their kids do not become spoiled and simply live off their inheritance. Parents see having a trust like this in place as a way to ensure that their child is encouraged to take a proactive role in making their way in the world.

There are instances in which life happens though. Your child may still be enrolled in school, come down with an illness or suffer a disability and be unable to work as much or in the way you hoped he or she would. Your child may even choose to volunteer or take a job in profession that pays poorly or is in a economically disadvantaged area. Fortunately, you can detail how you want the trustee to handle situations such as this when making distributions from the trust.

If you’d like to better understand the benefits of setting up a trust, whether incentive or some other type, then a Los Angeles estate planning attorney can answer any questions you may have.

Source: The Balance, “Do Incentive Trusts Work?,” Paul Spencer, accessed Sep. 21, 2017

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There is more to estate planning than understanding what will happen to your assets upon your death. Forget about this for a second and turn your attention to incapacity planning.

It doesn’t matter if you are thinking about your own future or assisting a loved one who is going through a tough time, you need to understand the finer details of incapacity planning, including how to make the tough decisions.

Incapacity planning is exactly what it sounds like. This allows you to prepare for a possible incapacity in the future, ensuring that your wishes are still carried out.

An example of this is the ability to specify who will handle your finances and personal affairs if you are unable to do so on your own, often as the result of a serious illness or injury.

There are many incapacity planning strategies to consider, including:

• Trust. This has a lot to do with the actual distribution of your estate after your death, but it can touch on all aspects of incapacity planning as well.
• Power of attorney. This is a written document in which you appoint a person to act on your behalf in the event of an incapacity.

It’s hard to think about a situation in which you may not be able to make your own decisions, but it’s something you need to do. Through the right approach to incapacity planning, you can feel much better about the future.

It doesn’t matter if you are thinking about your own situation or assisting a loved one – such as trying to determine if a parent should move into a nursing home – there are key details that require your full and undivided attention.

With the right approach to incapacity planning, you can feel better about a future that is full of uncertainties.

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