California residents who feel they have some assets to protect may be wondering whether a trust is the right choice and what type of trust they may need. Trusts might be a good choice for individuals who are planning their estates and need to protect their assets from potential creditors or who want to make sure the money they leave behind is properly administered when they are unable to do so. Trusts may result in tax advantages for the very wealthy, and they can provide more privacy than a will.

However, the right choice of trust based on the structure and benefits offered depends upon the financial situation of the individual and the aim in setting up the trust. A revocable trust offers greater control but fewer benefits while an irrevocable trust takes most of the control away but gives greater benefits.

A revocable trust offers no tax benefits, but as the estate tax exemption for married couples is now $10.6 million, few families will need a trust for this purpose. A revocable trust is a good option for anyone who wants to leave directions for the use of assets in the case of death. When that happens, it becomes an irrevocable trust.

An irrevocable trust does offer tax advantages for the very wealthy. The other main uses of an irrevocable trust are for circumstances such as supporting a dependent who is disabled or who should not control the assets for some reason or for protecting assets from professional liability or personal creditors. In the latter case, the trust has to be set up prior to the credit problems. Decisions regarding an irrevocable trust are made by trustees, and there is no control by the individual who establishes it.

Source: USA News, “How to Choose Between a Revocable and Irrevocable Trust“, Joanne Cleaver, June 19, 2014

Posted in Trust Administration | No Comments »

When someone passes away, their assets are generally distributed based on what is in their will or, if they die without a will, according to the state laws of intestacy. However, in many cases there are outstanding debts which can complicate the situation, especially if the individual’s estate planning documents do not address the issue.

An individual’s estate becomes the owner of both debt and property, and the will’s executor ensures that assets as well as debts are handled. Before an individual’s property can be given to the heirs, debts must be settled, including credit card balances, taxes and other liabilities. Once this is done, the remaining assets may then be distributed, but there are some situations where a person’s debt exceeds their property when they pass on.

In most cases, debt is not passed on to an individual’s family or heirs. The two main causes of someone being obligated to pay off another person’s debt after their passing are that the person had a joint account or responsibility or if they are the person’s spouse in a community property state such as California. If someone was a co-signer on a credit card, car loan or home loan, they will still have to pay off a debt after the other individual on the loan passes away. In California, surviving spouses may also become responsible for debts, even if it was not in their name.

Proper estate planning can help prevent these types of issues from arising or becoming problematic for an individual’s family. An estate planning attorney may be able to help someone understand which documents are required to ensure heirs are not left responsible for debts as well as drafting them.

Source: The Motley Fool, “What Happens to Credit Card Debt When Someone Dies“, Peter Andrew, July 19, 2014

Posted in Estate Planning | No Comments »

Having an estate plan in order as soon as possible can reduce the stress of those who are tasked with administering the estate and following a person’s final wishes. When documents are properly prepared and organized, it enables beneficiaries to get their inheritance sooner rather than later. If the last wishes of a California resident are not stated or are unclear, it could result in messy legal battles that could cost a lot of money to sort out.

There are a few ways for people to get their affairs in order before they die. The first step is to create a will or a trust that will contain instructions for how assets are to be distributed upon that person’s death. Other information such as insurance documents, investment account information and contact numbers for lawyers and other important people who may need to be contacted or who can be of help during a possible probate process should be readily accessible.

Finally, it is important to let heirs know where all the documents are. Whether they are kept in a shoe box or kept in an electronic folder, they are useless if no one knows how to find them. However, it is not recommended that they are kept in a safe deposit box because it may be difficult for a third party to access them.

Estate planning is easier when a plan is created by a maker who is young and of sound mind. This can help prevent future challenges to the will in probate court. In the absence of a valid will or trust, the distribution of a decedent’s assets would be governed by state intestacy law, which may not correspond to the decedent’s wishes. Those who need help with the estate planning process may wish to consult with an attorney who has experience in such matters.

Source: TIME, “Want Less Stress? Get Your Estate Plan In Order“, Beth Pinsker, July 15, 2014

Posted in Estate Planning | No Comments »

Los Angeles residents with high-value estates may be interested in the latest court filing by the executors of the Lou Reed estate. This filing outlines the value of most of Reed’s property, though some high-value assets have been left out.

On Oct. 27, 2013, former Velvet Underground singer Lou Reed passed away at age 71 from health issues related to a liver transplant. He was married to Laurie Anderson, a musician, but the two had no children. In his will, he left his estate to both his wife and his sister. In order to provide medical and other care for their mother, a separate gift of $500,000 was made to Reed’s sister.

The executors of Reed’s estate, including his former accountant and manager, have now filed papers with the court tallying up Reed’s assets. These consist of the copyrights for his songs, including cult hits such as “Walk on the Wild Side” and “Pale Blue Eyes” as well as his interests in the music publishing business. However, reports indicate that some of Reed’s property was not included in the amount. Reed owned a home in East Hampton, New York, as well as an apartment in Manhattan. The home was purchased for a reported $1.5 million just five years ago while comparable apartments have been sold for millions of dollars recently.

When making plans for high-asset estates, complex issues demand that the proper documents are drafted in order to protect those assets. An attorney with experience in estate planning may be able to help by assessing the person’s financial situation and determining the proper vehicles. They may also be useful in acting as a trustee or executor in order to help ensure that the property is distributed as desired.

Source: USA Today, “Lou Reed’s estate worth over $20M, executors say“, July 01, 2014

Posted in Trustees Executors & Fiduciaries | No Comments »

Increasingly, throughout California and the rest of the country, people over the age of 65 are getting married. This can lead to complications in estate planning particularly for those who have been married before and have children from a previous relationship.

Individuals who marry later in life need to look at their wills as well as considering a prenuptial agreement. New wills must be made because a marriage cancels any existing wills. Many older individuals with children who marry want to make sure that both their spouses and children benefit from their estate. They may choose to make arrangements in their will for a trust that allows their assets to pass to a surviving spouse as long as that spouse is alive and then to their children.

If either individual has lost a spouse, that person may have inherited their estate. In such a case, there may be an unused inheritance tax allowance. This and other aspects of tax liabilities should be kept in mind to minimize those liabilities. Lifetime gifts for their children may be one way of doing this.

In addition to considering their wills and how assets will be protected and passed on to heirs, couples may wish to draw up a prenuptial agreement to protect the assets that they bring into the marriage in case of divorce. Individuals should keep in mind that a prenuptial agreement may not be legally binding, but there are ways to ensure that it has a better chance of being honored in court. For example, the agreement should be drawn up at least a month before the wedding. This helps to ensure that the individuals were not rushed or coerced. It is also important that each had access to an attorney to discuss the terms of the agreement in advance.

Source: YourMoney.com, “Estate planning tips for newlywed pensioners“, Mark Politz, June 26, 2014

Posted in Estate Planning | No Comments »

The Kasem family had a somber Father’s Day as Casey Kasem, the iconic radio personality, passed away on Sunday. He had been in hospice care since Thursday afternoon, an attorney for Kasem’s daughter, Kerri, reported. The rift between Kasem’s children and his wife, Jean had been widely reported as his health declined in 2013. Among the many legal issues that had been litigated between the parties, Kerri recently won a conservatorship that allowed her to make decisions about his medical care, since Kasem was diagnosed as suffering from a form of dementia

Kasem was best known for his weekly radio show where he highlighted the 40 most popular song in pop music for that given week. The show, “American Top 40,” began in 1970 and ran until 1988. Another version of the show came about in 1998, when Ryan Seacrest took over the show. Before “American Top 40,” Kasem was an announcer on Armed Forces Radio, and worked at radio stations in New York, California and Ohio. He had been in the radio business since 1952, and was known for his trademark sign-off “Keep your feet on the ground and keep reaching for the stars.”

News of how his estate is to be divided has not broken yet. It remains to be seen how he intended to distribute his assets. But given the disputes between his wife and children, it would not be surprising if there is more legal turmoil. Nevertheless, the story is a prime example of why it is important to have a detailed estate plan to properly set expectations in the event of one’s passing.

Source: ABC News.com “Casey Kasem dead at 82,” Lesley Messer, June 15, 2014

Posted in Estate Administration | No Comments »

Father’s Day is this coming Sunday (June 15). It is a day to celebrate the sacrifices and contributions that fathers and father figures have made on their families, especially children. On Father’s Day, much of the focus is on giving dad gifts or giving him a rest from most of his duties. The gifts typically focus on power tools, fishing tackle, baseball tickets or even ties. However, it may be difficult to shop for the dad who has everything. 

If you have this problem, you may consider the gift of an estate plan. Indeed, planning for the unexpected may be a morbid proposition, but it is something that is necessary for men who have children and assets that must be distributed in the event of his passing. Essentially, without a will, power of attorney or healthcare directive, a man may not have the ability to direct how he may be cared for in the event he became incapacitated. Also, he would not be able to divide and distribute assets according to his wishes. Instead, he would be forced to do so according to California law.

While asset division according to the law may be okay for some, for others it may not be. A detailed plan can help prevent (and resolve) disputes over property ownership and a parent’s wishes regarding care. The situation involving Casey Kasem and his children is an unfortunate example.

An estate plan may also help in avoiding high estate taxes. Estates valued at more than $5 million may be subject to federal and state estate taxes that can severely limit the value of the estate.

With that we wish all of our readers who are fathers a happy Father’s Day.

Source: Forbes.com “Eight common estate plan objectives of married couples,” Lewis Saret, May 13, 2014

Posted in Estate Planning | No Comments »

Many people may not understand the importance of a health care directive or a living will. More people may not understand the difference between the two. Essentially, a health care directive allows one make specific rules about his or her care in the event they become incapacitated, cannot speak or cannot make decisions on their own behalf. Similarly, a living will can present protocols for a person’s care in end-of-life situations.

Regardless of what you understand about health care directives and living wills, and what value they bring, the situation with legendary DJ Casey Kasem and the ongoing battle between his children and his wife should make people think twice about ignoring these documents. While we have authored a number of posts on this story, we find it prudent to provide an update.

In the latest legal battle, a Washington state judge has affirmed a California state judge’s ruling that allows Kasem’s daughter, Kerri, to see the ailing patriarch at up to one hour per day, and to have an independent medical professional evaluate him. Kasem’s wife, Jean, has consistently disallowed visits from Kasem’s children, which has led to a slew of litigation over access and choices about care.

The former DJ known for his former “Top 40” countdown show is 82 years old and is apparently suffering from dementia. Since he presumably no longer has the capacity to make medical decisions on his own, he depends on others to dictate his care.

In the meantime, those who have questions about what a health care directive entails, an experiend attorney can help.

Source: Abajournal.com “Court OK’s independent medical examination for Casey Kasem,” Martha Nell, June 2, 2014

Posted in Trustees Executors & Fiduciaries | No Comments »

Whether you have a will or not, part of your estate plan must deal with digital assets. Traditionally, estate plans did not deal with these assets, since they are a relatively new aspect of estate planning. However, a majority of people have email accounts, and a growing number of people keep digital copies of important documents and pictures.

So when a person passes away, what happens to the email accounts, cloud storage information and passwords that protect them all? After all, beneficiaries and executors may not know about this information, much less the passwords or usernames that come with them. In fact, technology companies are developing policies for when and how to transfer an account (such as an email or online trading account) to a loved one upon their death. 

With that said, what should a person do in order to safeguard their account against unauthorized use? An experienced estate planning attorney can help you with the following:

–          Organizing digital data by tracking down information from a variety of sources

–          Helping you understand company policies regarding transfer and use of information

–          Identify products and documents that can safeguard your  information

–          Provide access to trusted individuals as well as detailed instructions for how to use the information

All of these, and other steps are part of a 21^st century estate plan. Keep in mind that no two estate plans are alike, and there is no set standard for protecting digital assets. If you have questions, an estate planning lawyer can help.

Source: cnbc.com “Protect your digital assets after your death,” Thomas Henske, May 19, 2014

Posted in Estate Planning | No Comments »

The legal wrangling between Casey Kasem’s wife and Kasem’s children continues. Last week, a judge ordered an investigation in to Kasem’s whereabouts after his children had complained that he had been removed from the state of California without their knowledge. Kasem, who is best known for his long-running radio show detailing America’s top-40 songs, is 82 years old and suffers from Lewy body dementia, which results in a progressive decline in mental abilities.

Over the course of the last year, the litigation over his care, and the children’s ability to spend time with him, have been hotly contested issues. Specifically, the children have expressed concern about not being included in decisions about his care, and they have complained that they have gone long periods of time without being able to see him.

The problems are emblematic of family struggles when a family matriarch (or patriarch) becomes ill and adult children bicker over what to do. Some people draw up healthcare directives or living wills to avoid this problem. Through these documents, a person can designate a representative (or proxy) to communicate with medical personnel and make sure that the person’s wishes are carried out in the event they cannot communicate.

In the meantime, Kasem was found safe in Washington state. He reportedly was on vacation with his wife, Jean. He also is said to have known where he was and went on vacation willingly. Kasey’s daughter, Kerri expressed relief and gratitude towards authorities.  Nevertheless, it is expected that the legal disputes between Jean and the children will continue.

Source: ABC News.com “Casey Kasem found safe in Washington,” May 15, 2014

Posted in Estate Administration | No Comments »