A trust may be a worthwhile estate planning tool for many people who live in California. As a general rule of thumb, anyone with a net worth of $100,000 or more may benefit the most from a trust. They may be even more effective for those who also own a business, want to care for a disabled family member or want to delay distribution of assets to children or other heirs.

Many people choose trusts because they may enable an estate to bypass the probate process. With a generation-skipping trust, it may be possible to shield a large amount of money by giving it to grandchildren instead of immediate children. Having a trust offers an additional benefit of naming a trustee who can manage assets after the grantor dies or if the grantor becomes unable to do so while still alive. In a properly-drawn trust, assets may be protected from creditors.

The cost of establishing a trust varies depending on the complexity of the trust. Assets that are included in the trust must be retitled in the name of the trust. Any assets that are not retitled in the name of the trust run the risk of being subjected to the probate process and being distributed in another manner.

Creating one or more trusts may make it possible to protect assets now and retain greater control over how they are distributed in the future. Anyone who is thinking about creating a as part of the estate planning process may wish to talk to an attorney who has experience in this area and who can tailor the document to the client’s particular needs and desires.

Source: CNN Money, “Estate planning: Is a trust beneficial?“, November 16, 2014

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When a person dies in California, his or her estate may be subjected to administration by the probate court. Any assets that were given away prior to the decedent’s passing will not be subjected to probate. Property and assets that were included in a living trust also are not administered by the courts.

For people who have left wills, the probate case can be opened to administer the estate by filing a petition to administer the will. The will must also be filed. If the testator has not named an executor, the petition will include a request that the court appoint one. In cases in which there was no will, the probate court will appoint an administrator. The administrator will then make certain that all creditors and taxes are paid prior to distributing the property and assets according to the state’s intestacy laws.

When a spouse is surviving or if a home is owned in joint tenancy, the home will pass to the other person without being probated. The value of jointly held accounts will also automatically pass to the joint account-holder. Similarly, life insurance money is normally not a part of an estate and will go to the named beneficiary of the policy.

Understanding how estate administration works can help people as they plan. By making careful decisions regarding their wills and whether or not they wish to include property in a living trust people can help reduce the potential tax burden on their estate following their death. Careful planning and making certain to make a complete list of all assets, accounts, interests and property can be of much help to an individual’s estate planning attorney. People should also make a list of all of their intended beneficiaries along with their contact information and determine how they wish their property to be divided.

Source: Superior Court of California, County of Sacramento, “Decedents’ Estates“, November 09, 2014

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There are many reasons why a person might wish to challenge a will. In the majority of cases, the person contesting a will is likely to benefit financially if the will is invalidated. California law permits contestants to challenge wills on several grounds, including lack of capacity, undue influence, revocation, fraud, duress and mistake.

A person who wishes to contest a will in California must file an objection to the probate of the will with the court having jurisdiction over the matter. A summons will then be issued, and it must be served along with the objection on all persons required to be served by statute. Persons served will then have 30 days within which to file a response to the objection.

If a person fails to respond to the summons within the required time frame, the case shall proceed to a hearing despite the failure to respond. The court will consider the objection and any other documents that were filed with the court by the time of the hearing. A person who fails to object may not participate any further in the will contest, but he or she will be bound by the court’s order. Following a hearing, the court will enter an order either admitting the will to probate or rejecting it, and a personal representative will be appointed for the estate.

Initiating a will contest can be challenging, both in terms of the complex legal landscape and the fact that emotions often run high in situations involving these types of matters. For those wishing to challenge or defend a will, it is important that all statutory requirements are met and that pleadings and other documents are filed within the appropriate time frames. Attorneys experienced in probate litigation can assist clients in navigating this complex process.

Source: California Law, “Probate Code Section 8250-8254 “, November 01, 2014

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When someone wants to become a guardian of a child in California, they typically do so by filing a petition with the court. Other relatives of the child must be given notice in addition to the parents if they are living. If either one of the parents object, the court will hold a contested hearing at which the intended guardian will need to show that it is in the best interests of the child to appoint him or her as the child’s guardian.

The forms and processes involved can be quite complex. If the person is only wishing to become a guardian over the child, they start with filing a petition for guardianship. If a person is wishing to be appointed guardian of the child and his or her estate, then the initial filing is a petition for appointment of guardian of minor.

Notice must be given to the child’s parents, grandparents, siblings and half-siblings a minimum of 15 days before the hearing. The paperwork must be served by a person over the age of 19, and the person cannot be a party involved in the action. The court will assign an investigator to interview the child and the person filing for guardianship as well as the child’s parents if they are living. The investigator will make a recommendation to the court regarding whether or not the guardianship should be approved.

There are many reasons why a person may seek appointment as a child’s legal guardian, and this information is not reflective of an individual attorney’s advice. Since unexpected situations can occur, parents may wish to speak with an attorney experienced in estate planning in order to ensure that their child receives adequate care. He or she may be able to appoint a new guardian in the event of their untimely death.

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In drafting a will, a California resident may wonder whether all assets and belongings are covered by the document. In some cases, an individual might choose to clarify designations already included in assets such as life insurance policies and retirement plans. In other cases, there might be a concern about whether articles held in joint tenancy should still be listed in a will. It is helpful to recognize that only assets titled in one’s own name at the time of death are typically covered by the directions set forth in the will.

Assets such as retirement plans and life insurance policies typically include a beneficiary designation that stipulates how funds will be distributed upon one’s death. Securities or brokerage accounts are also dispensed based on transfer on death instructions. Even if these are listed in a will, the proceeds will be distributed according to designations made with the company managing these assets. Similarly, assets that are held jointly with a right of survivorship will be distributed to the remaining joint tenants regardless of any indications in a will. This is similarly true of community property held by married couples or domestic partners. Additionally, one’s will may not prescribe the distribution of a partner’s portion of community property.

Assets that are included in a living trust are managed according to the instructions contained in the trust document. Wills cannot counter these directions. In a revocable living trust, the testator typically serves as the trustee until becoming incapacitated or until death, at which point a successor named in the trust takes responsibility for managing the assets in the trust.

Although much of one’s estate may not be affected by a will, it may be important to have a will in place in case of unexpected changes such as the death of a beneficiary or the receipt of an unexpected asset. A lawyer may help in wording a will to express one’s wishes in case of such unexpected circumstances.

Source: The State Bar of California, “2. Does a Will Cover Everything I Own?“, October 17, 2014

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People in California who save for their dependents’ college tuition in a Section 529 college savings account are able to accumulate tax-free accounts. This is a major factor for why people choose this type of account, but what many people might not realize is that these accounts are also beneficial during estate planning.

Contributing small amounts to 529 accounts is effective, but some people prefer to give a large lump sum. One of the nice things about these accounts is that contributions are considered gifts, and up to $14,000 is excluded from gift taxes. The exclusion applies to each contributor, so a couple is able to put in $28,000 into the account tax-free annually.

Another considerable advantage of using a 529 account is the ability to change beneficiaries without tax consequences. If one person decides not to go to college or gets a full ride scholarship, the money could be given to fund another person’s college education. However, the new beneficiary must be related to the initial beneficiary. They must also be part of the same generation or a higher generation. Contributors could also get their money back with only a 10 percent penalty.

Using this strategy to reduce a person’s taxable estate is only one of many options that person might have to shield their assets from unnecessary taxation. Those who are seeking other ways to protect the value of assets when they are passed to the next generation might benefit from working with an estate-planning attorney. That attorney may be able to develop a strategy that provides for the interests of a client while offering ways to avoid undue tax burdens.

Source: MarketWatch, “Using 529 college savings accounts for estate planning“, Bill Bischoff, October 07, 2014

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A California resident may wonder about the preparation of a living will, which is a written expression that indicates how someone wants to be treated in given medical situations. An individual may detail wishes for or against life-sustaining measures. Similarly, preferences for tube feeding and other means of providing hydration and nourishment may be expressed.

It is critical that an individual clearly understand the implications of the language used in a living will due to the fact that some definitions may include unanticipated consequences. For example, an individual using a breathing device to address chronic obstructive pulmonary disease may be affected by noting that assisted breathing devices not be used for sustaining life. While one might presume that life-saving breathing machines refer to ventilators or heart-lung machines, the COPD equipment might fit the category of assisted breathing device and be withheld. It is also important to recognize the philosophical and religious implications of one’s decisions documented in a living will. While living wills are typically considered in light of terminal illnesses or injuries, it is also possible in most states to include conditions related to cases of a permanent unconscious state in which no brain activity is detectable.

A living will does not apply to situations that are unlikely to result in an end of life. Typically, this element of estate planning is intending to provide clarity of one’s wishes in cases where death is likely without intervention. One’s decision to refuse life-sustaining measures does not mean that pain relief solutions such as medication would be denied.

Someone who has definite opinions about end-of-life decisions related to providing or not providing life-sustaining treatment may want to review documents and definitions with an estate planning attorney prior to signing them. This will allow for clarification on issues such as COPD treatments and other issues to avoid misunderstandings.

Source: American Bar Association, “Estate Planning FAQ”, October 06, 2014

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A trustee in the state of California has the responsibility of managing property in a trust that has been established for an individual’s beneficiaries. The trustee is required to adhere to the requirements that the creator of the trust, also known as the settlor, mandated.

Trustees are required to preserve and protect the trust’s assets. Trustees have their powers spelled out in the trust document and they are required to comply with those orders as long as they do not violate California law or a court does not issue other orders. They manage the property to assist the beneficiaries in ways the settlor intended.

They can make investments, sell assets, handle trust bills and expenses, make repairs to property in the trust, and make distributions to beneficiaries in accordance with rules of the trust. Trustees need to be equitable in their actions and not favor one beneficiary over another. They also need to avoid any conflict of interest or taking actions that could be construed as being done for their own financial gain instead of assisting the beneficiaries.

Trustees also need to keep property in the trust separate from other individuals’ property. The designated trustees also need to tackle the trust requirements themselves. If they need to designate a responsibility to another party, they need to oversee that individual or entity’s work. Keepers of trusts must also maintain detailed records and make periodic reports to the state regarding activities of the trust.

Each legal situation is different, and the information in this blog should not be taken as legal advice. A person who is looking to establish a trust might consult with a wills and estates lawyer. A lawyer can help establish the rules that look after beneficiaries and inform a trustee of his or her rights and obligations.

Source: The Superior Court of California, “Probate Trusts“, September 28, 2014

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Probate is a process of distributing assets to beneficiaries upon the death a person. The process is started and organized by the executor named in the deceased person’s will or possibly by another family member if there is no will. The probate court will work to resolve disputes between family members, and the final disbursement of assets must have court approval. The probate process in California comes with many statutory fees and can become very expensive if the decedent’s estate is complex.

A will is not sufficient to avoid the probate process. Instead, the will serves as a legal guideline for the executor and the court. In order to avoid or minimize probate, assets must be transferred into some kind of trust. Any assets not in a trust are still subject to the probate process.

One of the best types of trusts for this purpose is the revocable living trust. This type of trust allows the individual to remain in control of all of the assets in the trust and the trust itself until his or her death. They can also modify the trust at any time. This includes such activity as adding or removing assets from the trust or changing the beneficiaries. As long as the person is still legally competent, they remain in control. The trust then becomes irrevocable upon their death and assets in the trust are automatically disbursed to the beneficiaries according to the wording of the trust.

An estate planning attorney can assist a person in establishing a living trust and discussing any advantages to leaving assets out of the trust for probate. If a probate process is needed, then an attorney can assist an executor in resolving the process as efficiently as possible.

Source: The State Bar of California, “Do I need estate planning?“, September 19, 2014

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The estate planning actions individuals take can affect the probate process after their death, potentially impacting those who may be poised to receive remaining assets. Probate is the court process for legally transferring those assets, and during this action, the outstanding financial obligations of the decedent are handled as property distribution is addressed. Additionally, probate is used to determine the validity of a will if one exists.

The probate process may not be required in some cases. Some of the factors determining whether probate is necessary may include the types of assets involved, the individuals claiming a right to assets, and the amount of money at stake in the estate. In some cases, an asset may include joint tenancy with ownership continuing with a surviving individual on an account. In other cases, a beneficiary may be named on an account so that ownership is transferred upon death. Although some legal actions may be required, these properties may be kept out of probate courts.

A simplified process for the transfer of property may be available if a decedent’s estate is valued at less than $150,000. However, the simplified approach is not applicable with a house or other real property. A Petition to Determine Succession to Real Property may be used for such issues and must be filed with the court. The simplified process for transferring assets, meanwhile, involves valuing the property to be transferred and filing an affidavit after at least 40 days have elapsed from the time of an individual’s death.

Because the types of property to be considered for a simplified process can be limited, it may be beneficial to seek guidance from an estate administration lawyer in determining whether probate can be avoided. Additionally, legal counsel may be helpful in approaching the probate process if a sizable estate exists.

Source: California Courts, “Wills, Estates, and Probate“, September 14, 2014

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