You want to leave your adult children an inheritance or perhaps give them a large chunk of money while you’re still alive. However, you don’t want to risk having half or more of that money go to their spouses should they end up divorcing.

It happens all too often. People lose significant parts of their inheritances, including money, property and businesses, that their families intended for them to have.

Maybe you don’t care for your child’s spouse or you don’t see the marriage lasting. Maybe your child hasn’t even begun contemplating marriage. You can still take steps to protect his or her financial future. Actually, if you take this action before there’s a spouse in the picture, no one can take the action personally.

You can place the inheritance in a trust account in your child’s name. If the assets remain in the trust, the spouse isn’t entitled to them, even in a divorce. Setting up a trust costs more money than gifting money to your child or simply designating an inheritance in your will. However, it’s worth it if it can help ensure your child’s financial security.

Of course, if your child removes money from the trust and commingles it with marital assets (such as using it to buy a house that’s in both spouse’s names or to open a joint account), that will make the funds marital assets. That’s why it’s important for anyone who is acquiring a significant amount of assets to learn what steps to take to protect them. An experienced California estate planning attorney can provide guidance to help ensure that your hard-earned money stays in the family.

Source: Kiplinger, “A Trust Can Protect Your Adult Child’s Assets from a Failed Marriage,” Lisa Brown, CFP, accessed March 24, 2017

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It happens in many families where the roles reverse and adult children become responsible for the welfare of their parents. If a doctor has diagnosed your parent with dementia or other mentally impairing disease, it may be time to start taking steps to ensure that you will be able to manage affairs when the time comes.

In California, the court can appoint a responsible person or organization to act as the conservator for an impaired adult. For example, if your father’s health is failing and he is no longer able to care for himself or manage his own finances, a conservatorship will grant you the authority to act on his behalf. The process of applying for conservatorship can be complex. An attorney can advise you on how best to proceed. Read further to find out more about who can file for conservatorship and the duties required by law.

Eligibility to be a conservator

Several people are eligible to file for a conservatorship. As a relative, you have the right to file for the position for your father. In addition, a spouse or domestic partner can also request to be a conservator. Other eligible applicants for a conservatorship include any interested state or local agencies, individuals or friends, or even your father himself.

When appointing a conservator, the court will base its decision on what is in the best interests of your father. If your father nominates you for the position while he still has the majority of his mental faculties, the court will more than likely approve the request. Typically, the court will only deny a conservatee’s nomination if it decides the person or entity is not in his best interests.

Duties of a conservator

As your father’s conservator, the law requires that you arrange for his care and protection. You will have to decide where your father will live and you will have to make arrangements for his meals, health care, personal care, and even his recreation. In general, you will have to attend to everything regarding his well-being. You will have to receive approval from the court for certain decisions about his health care and living situation. Also, you will have to file periodic reports with the court on your father’s status.

Conservator of the estate

As the conservator of his estate, you will have to manage your father’s finances, locate and take control of his assets, and collect his income. California also requires that you create and maintain a budget that your father can afford. Furthermore, you must protect his assets, responsibly invest his money and pay his bills. You will also have to provide accounting records to the court as proof that you are properly managing your father’s financial affairs.

Conservatorships can be complex and time-consuming. If you have a parent that requires a conservatorship, it is important that you understand his or her rights. Enlist the help of a Los Angeles area attorney experienced with elder law for advice on obtaining a conservatorship for your parent.

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It’s often a wise idea for Californians to set up a living trust when they do their estate planning. This type of trust (also called an “inter vivos” trust) can make matters considerably easier on heirs after you pass away, and prevent them from having to go through probate proceedings, which can be lengthy and costly.

Upon the death of someone with a living trust, the ownership of all assets included in the trust transfers to the beneficiary he or she has designated. Many people include their bank accounts and homes in their trusts. Your California family law attorney will provide guidance on retitling these items so that they’re part of the trust.

Of course, people can continue to add to or remove items from the trust throughout their lifetimes. Having an asset included in a living trust doesn’t impact your ability to use it.

A living trust can also reduce estate taxes, particularly if numerous valuable assets are included or for married people with children. Your attorney can help you structure the trust in a way that will best help reduce taxes paid by those who inherit your estate.

One of the key advantages of estate planning in general, including the creation of a living trust, is that it allows people to designate where they want their assets to go after they’re no longer here. Estate planning also lets people designate who will speak for them regarding medical and financial issues if they become incapacitated and unable to speak for themselves. By detailing your wishes while you’re alive and well, you can save loved ones a great deal of conflict and stress later on.

Source: FindLaw, “Living Trust Information,” accessed March 15, 2017

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Losing a loved one is a difficult time. You may have to deal with your loved one’s estate after the death if he or she had any assets. Many estates have to go through probate. Understanding some basic points about probate can help if you are facing this situation after your loved one passes away.

#1: Do all estates go through the probate process?

All estates don’t have to go through the probate process. There are specific criteria that must occur that can mean an estate won’t have to go through probate. Typically, estates with a value of $150,000 would need to go through this process. If a person died intestate, or without a will, probate is likely necessary. Seeking out the help of an attorney is important in these cases.

#2: How are bills of the decedent handled?

A solvent estate is one that includes enough assets to pay the decedent’s bills. An insolvent estate doesn’t have enough in assets to pay all the bills. The personal representative needs to find out how the law requires payment of bills. The estate is used to pay creditors according to applicable laws, which dictate the payment order for various types of bills. Some creditors might not be paid based on the order of repayment set by the law.

#3: Do I have to use life insurance to pay bills?

Life insurance funds don’t have to pay bills the decedent leaves behind. The life insurance funds aren’t usually part of the estate. Life insurance funds help to pay the decedent’s final expenses and to help the beneficiary.

#4: What does payable on death mean on financial accounts?

Some financial accounts have a payable on death designation. This enables the owner of the account to list a beneficiary. The beneficiary gets access to the funds when the owner dies. This means that the account isn’t subject to the probate process so the beneficiary can access the funds immediately.

#5: What is right of survivorship?

In the case of real estate, if one property owner dies, the other one gets full rights to the property. This concept is known as right of survivorship. It is the way that one spouse is able to remain in the marital home if the other spouse passes away. Unmarried couples and same-sex couples should learn how right of survivorship applies to their cases wh en one partner dies.

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Most people think of estate planning as designating how assets will be handled after they die or if they are no longer able to speak for themselves. However, certain aspects of estate planning, like living trusts, are important for protecting your assets while you’re still alive and well.

There is something called a “life estate” that covers residential property that is owned by people while they are still alive. Life estates are often created so that people don’t have to risk giving up their property if they go on Medicaid.

When someone creates a life estate, it is valid for as long as the “life tenant” or grantor is still alive. That person still has possession of the property and any profits or rent obtained from that property.

However, that life tenant still has an obligation to “remaindermen” not to waste or sell the property. These remaindermen are the ones who will own the property when the life tenant passes away, and there is no probate proceeding.

While a life estate may be a good idea for those who don’t want to risk losing their home to cover health care costs, it’s not the best solution for everyone. Those with significant resources and their beneficiaries may need to deal with estate and gift taxes.

Estate laws vary significantly by state. That’s why it’s essential to consult with an experienced California estate planning attorney in order to determine how to best protect your assets while you’re still alive and to ensure that your wishes are carried out if you become incapacitated or die.

Source: FindLaw, “Life Estate Q and A,” accessed March 08, 2017

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Everyone wants their heirs and beneficiaries to get as much money as possible when they pass away. They’ve worked hard for that money and assets that they’ve accumulated, and they want to see it continue to be used for good and for the benefit of their family.

President Trump has said that he’ll repeal the federal estate tax, which is currently at 40 percent. This appears to be good news for people who inherit a significantly large estate ($5.45 million or more). With a majority-Republican Congress, the president may well get his way. However, one California state senator is seeking to keep the estate tax in our state.

The state senator from San Francisco, Scott Wiener, says “If Donald Trump and congressional Republicans are hell-bent on cutting taxes for our wealthiest residents, we should counter-balance those tax cuts by recapturing the lost funds and investing them here at home in our schools, our healthcare system, and our roads and public transportation systems.”

With careful estate planning, you can minimize and maybe even avoid having your heirs pay an estate tax (sometimes referred to as a “death tax). That can be difficult if you have a family business or a family farm. With state inheritance taxes, your combined tax rate could be as high as 68 percent.

No one knows what federal and state laws will impact Californian’s estates. If you have a large estate, when doing your estate planning, you want to spare your heirs and beneficiaries from unnecessary taxes. An experienced California estate planning attorney can help you do that.

Source: Forbes, “Trump Vows Estate Tax Repeal, But California Plans Its Own 40% Estate Tax,” Robert W. Wood, Feb. 23, 2017

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The duty of a trustee is to manage the assets in a trust in accordance with the terms designated for the benefit of the trust’s beneficiaries.

If you set up a living trust for yourself and are the beneficiary, you have the right to take money or assets from it as you choose. However, if you are the trustee of a trust that’s been set up for someone else, removing funds, even if you intend to replace them, is considered embezzlement. California law defines embezzlement as fraudulently appropriating property entrusted to you but belonging to someone else.

Those convicted of embezzling from a trust can face criminal penalties including prison time. They can also face civil sanctions and have to pay restitution and penalties.

It can be tempting to “borrow” money from a trust. Sometimes people find themselves in financial trouble and figure that no one will miss the money since they plan to repay it before the beneficiary needs or is entitled to receive it. However, that “borrowing” is still illegal.

Too often, older people — particularly those who are mentally incapacitated — become the victims of trust fund embezzlement by caregivers or even family members who assume that they’ll never miss the money. This is a form of financial elder abuse.

Beneficiaries have the right to seek information about the status of their trust if they have reason to believe that the trustee is not maintaining it legally. They can also ask a court to remove the trustee if there are grounds to do so. An experienced California estate planning attorney can provide legal guidance to help you protect the integrity of your trust or that of a loved one.

Source: Lake County News, “Estate Planning: Trustees who ‘borrow’ trust funds,” Dennis Fordham, Feb. 18, 2017

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Some Californians live on top of gas and oil. If these valuable resources are in the ground under your property, you may be getting some nice royalty income on a regular basis. Even if you sell your home, you can retain the rights to what is underneath it.

The disposition of those royalties should be dealt with in your estate plan. What’s the best way to do that? If you want to ensure that the royalty income never goes to anyone but your descendants, you can place the royalties in a trust. The trust specifies that these rights only pass on to those within your own bloodline.

People may think that they have this covered by leaving the royalties to their children in their wills and specifying that they in turn must keep them in the bloodline. However, unless those beneficiaries have estate plans designating the same thing, their share of the royalties could end up in other hands.

One California attorney gives an example of a woman who passed her royalties down to her daughter. In turn, the daughter left the mineral rights to her children when she died. Both made the stipulation that the royalty rights remain in the hands of blood relatives.

Unfortunately, one of those adult children died without a will. Because he had no spouse or children and his mother predeceased him, under California law, his father was his sole heir. The father had children from an earlier marriage and may marry yet again. Since his son had no will designating to whom the royalties could be bequeathed, the father can legally give them to anyone he wants to.

Not everyone is particular about what beneficiaries do with their inheritances or to whom leave it when they die. However, if it’s important to you that assets stay within a family, a trust can provide this assurance. Your California estate planning attorney can offer guidance on how to do this.

Source: Pasadena Journal, “All in the Family,” Marlene S. Cooper, Feb. 01, 2017

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As a young adult, you have a lot of new responsibilities. You might think that you have everything covered, but have you made an estate plan? An estate plan is an important part of being an adult, especially if you have a spouse and children, because the estate plan lets those who are left behind know what to do with your assets.

Myth 1: You are too young to have an estate plan

If you are an adult, you need an estate plan. These plans aren’t only for the wealthy. Even if your only asset is you’re a vehicle or cash, an estate plan is still a good idea. Estate plans don’t include only how to handle your assets, they also include information about what will happen if you become incapacitated.

Myth 2: You can create the plan and forget about

You should revisit your estate plan at least annually once you have it completed. You may have to change the estate plan if you have a new child, get married, get divorced, or have other significant changes in circumstances.

Myth 3: You can forget about digital assets

Digital assets, such as social media accounts, should be included in your plan. This is especially important if your accounts include pictures and other sentimental items that your family members may want access to after you pass away.

Myth 4: Anyone can handle your estate

You should choose the people who are going to handle your estate carefully. Trustees and administrators should be trustworthy and honest. They should know you and what you would want to happen in specific circumstances.

Myth 5: Beneficiaries on financial accounts don’t need to change

As your life circumstances change, you might need to update beneficiaries on financial accounts. Check the person listed on payable on death accounts, such as bank accounts. Double check beneficiaries on life insurance policies.

Myth 6: Nothing will happen to you

Once you have children, you need to plan for them. It isn’t pleasant to think that something will happen to you, but it is a possibility. You must include guardianship information in your estate plan so your children aren’t left hanging in limbo in foster care.

Myth 7: Someone will care for your pets

Beloved pets are often pushed to the wayside when the owner dies. If you don’t want your dog, cat or other pet to end up in a shelter, include provisions for them in your estate plan. This can include a pet trust if necessary.

Myth 8: You will stay healthy until you die

Your estate plan should include a health care power of attorney. This person makes decisions for you if you are unable to do so for yourself. A living will is another tool to help you make your wishes known about life-prolonging care if you can’t speak up because you are incapacitated.

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You’re the trustee of a trust for a beneficiary who owes money to creditors. Can you be required to use assets in that trust to pay that beneficiary’s debt? Under California law, you may be able to avoid having to do that. However, it depends in part on how the trust was established.

A trustor or grantor (the person who creates the trust) can put protections in place against some creditors. However, it should be noted that these don’t apply if the beneficiary’s debts involve reimbursement of public benefits, criminal restitution or child or spousal support.

For example, a trust can have something called a “spendthrift clause” that prevents the beneficiary from using money in the trust to pay creditors — either voluntarily or involuntarily — unless a creditor obtains a court order. However, if the money is deemed necessary to support the beneficiary and his or her family, it can’t be taken, even with a court order.

Another way to avoid having assets in a trust taken by a beneficiary’s creditors is to set up a support trust. These trusts require that the principal and/or income of the trust be used for the support or education of the beneficiary. A creditor would have to prove that all of the money is not needed for that purpose to claim it.

Another type of trust that can provide protection against creditors is a discretionary trust. The trustee has sole discretion over distributions from a discretionary trust. A trustee may be able to help the beneficiary by making payments or purchases for the beneficiary (such as paying for housing, for example) without actually distributing the money from the trust directly to the beneficiary, where it could be taken by creditors.

Once assets are distributed from a trust, collection actions can be taken by creditors to take their share of the money. Even if they haven’t yet been distributed, a creditor can take action to require that any mandatory distributions be taken by something called “step[ping] into the beneficiary’s shoes.”

Any trustee who is dealing with issues involving a beneficiary who has creditors seeking all or part of the assets in a trust should seek experienced legal guidance to help ensure that he or she isn’t in violation of any laws or court orders.

Source: Lake County News, “Estate Planning: Trusts and judgment creditors,” Dennis Fordham, Feb. 04, 2017

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