Silly Bands and Pogs from the 1990s and Cabbage Patch Dolls from the 1980s were collectibles that some people bought in quantity, with the idea that someday those childhood toys would be “worth something.” Other than niche buyers, who today values a Cabbage Patch Doll the way they did in 1985?

Extreme value fluctuation is possible with some assets, which makes it difficult to design estate plans. Think of the value of your home during the recent recession. Although California real estate prices rebounded, property values fell through the floor a few years ago. The asset you thought you had wasn’t worth what you thought it was. Then, things changed again.

The value of assets determines how you will divide and shield them from losing worth. You can’t plan when you don’t know the value of what you own. The Internal Revenue Service may not put the same price tag on your assets that you do or a professional appraiser does.

Like Elvis, Michael Jackson’s estate became more valuable after his death than when he was alive. Jackson’s music soared in popularity upon the singer’s 2009 death, spiking previously-declining royalties by millions of dollars.

Planning and estate administration get very complicated when assets hold unsteady values. Most individuals don’t have royalties to worry about, but they do have collections of art, family businesses and, increasingly, intellectual property – assets that can lose and gain value rapidly before or after you die.

Attorneys suggest establishing asset values in detail while you’re alive, with projected values for when you’re not. The IRS is slightly flexible about property valuation. Estates have the option for asset valuations on a date of death or six months later.

The Silly Bands you own may mean the world to you but, during estate planning, you have to worry what value your assets have to the open market, your heirs and, without a doubt, the IRS.

Source: nytimes.com, “Putting an Estate Value on the Assets Unique to You” Paul Sullivan, Sep. 27, 2013

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Financial elder abuse can be prevented by a carefully-crafted estate plan, provided the documents are in place while an individual is relatively young and healthy. Wills drafted in advanced age can invite legal contests among heirs and beneficiaries.

Huguette Clark came from “old money” and a lot of it. Clark inherited $300 million from her mining mogul father, some of which she used to purchase a California mansion and other magnificent homes.

The extremely private heiress outlived all her close relatives. By choice, she spent the last 20 years of her long life in a hospital. About five years before she died in 2011, Clark created two distinctly opposite wills.

One will stipulated the majority of Clark’s vast fortune should go to distant family members. Less than six weeks later, a second will left instructions to split the estate among completely different beneficiaries, including art institutions.

Huguette’s family members petitioned a probate court in 2010, questioning the activities of the estate’s two managers. Relatives felt the administrators and Clark’s caregivers took advantage of the heiress’s advanced age and declining health. The assertions were never proven to be true.

A trial for resolving problems with the Clark immense estate was averted with the approval of a settlement that combined some elements of both wills. Twenty of Clark’s relatives will share more than $34 million. The $85 million California mansion will become part of an estimated $100 million arts foundation. Ten million was set aside for a Washington art gallery.

Clark’s long-time nurse and the disputed estate managers were cut out of the inheritance. The nurse also was ordered to forfeit $5 million of $30 million in gifts given to the caregiver by Huguette while the heiress was alive.

Age can diminish the ability of an individual to make sounds decisions about finances. Early estate planning greatly reduces chances for legal disputes and elder financial fraud.

Source: usatoday.com, “Heiress Huguette Clark’s will settled, with $300M at stake” No author given, Sep. 24, 2013

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California estate planning laws include ways Los Angeles residents can circumvent probate. Some probated estate issues take a long time to resolve and devalue an estate. In many cases, probate functions simply to verify the validity of a will so the last desires of a decedent take place.

Living trusts and property joint tenancy move assets to beneficiaries without probate. Realistically, unless an estate plan is updated each time an asset is accumulated, there is no way every asset can be shifted to a trust prior to death. The straggling asset solution is often an open-ended will, which does go to probate.

Another popular probate avoidance approach involves sharing property ownership with an heir, usually a spouse. Right of survivorship allows a property owner to absorb an asset like a home upon a co-owner’s death. Joint tenancy becomes a probate issue when co-owner’s deaths don’t occur as estate planners anticipated. Problems also surface for individuals who don’t want a co-owner to have complete asset control.

Probate fears are reasonable for high-value and complex estates, but not so much for a modest number of assets. California’s laws permit estates up to $100,000 to settle without probate.

Creditor protection is one reason trusts are popular, but California protects probated estates from long-term creditor claims. Creditors must file a claim within four months of an executor appointment to receive estate proceeds. A creditor who waits longer is likely to go unpaid.

Estate planners and heirs are sensitive to the time probate issues take to settle. In truth, uncomplicated probate settlements take just a few months. Another advantage of probate is the court’s power. Decisions made by a probate court are final, which dispenses with ongoing, estate-shrinking arguments among family members.

Analysts believe making probate avoidance the sole theme of an estate plan is short-sighted. Each client and each estate are as unique as the legal advice that accompany them.

Source: lifehealthpro.com, “6 reasons why probate isn’t that bad” Tom Nawrocki, Sep. 13, 2013

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Beneficiaries do not have to be named in a will to receive assets from an estate. A life insurance policy is an example. The proceeds from the policy go to the assigned beneficiary, whether or not that person is also named in a Los Angeles will, trust or other estate planning document.

Heirs may be confused or suspicious of conflicting recipients of estate assets, especially when the beneficiary is not a spouse, child or some other immediate relative of the decedent. Asset distribution grows more complex and costly when issues are forced to probate, like an estate whose former owner died intestate – without drafting a will.

Estate administration is a legal reference to the handling of intestate assets which frequently must pass through probate to be resolved. Heirs of small California estates can avoid probate, even without a will, by signing a declaration that an estate is valued at less than $150,000.

The heir who submits the declaration must fit eligibility requirements, work in a time frame, provide required documents and realize responsibilities come with benefits. The declarer takes on the estate’s debts, which are deducted from assets.

Since the guidance of a will is lost, a dispute could arise over which heir is qualified to submit the declaration. Potential heirs could be minor children who cannot sign legal documents.

Probate allows an adult to sign a child’s declaration, but the purpose is to avoid court. An adult who does not wish to establish guardianship may petition the court under the Uniform Transfers to Minors Act for the estate assets to be sequestered in a custodial account until the child is an adult.

The legal scrambling that takes place following an intestate death can be avoided by estate planning. Wills are basic documents that provide asset distribution instructions and the decedent’s desires for the care of a non-adult child.

Source: elderlaw.sonomaportal.com, “How to guard teenager’s inheritance?” Len Tillem and Rosie McNichol, Sep. 05, 2013

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Grief and duty mix following a family member’s death. Relatives nearest to the deceased are often assigned the roles of executors and trustees with time-sensitive duties to perform. Fiduciary responsibility begins the moment someone dies and continues until estate assets are distributed, as directed by the decedent or a court.

Fiduciaries for an estate have an obligation to work in the best interests of heirs and beneficiaries, which includes keeping them informed. In California, the will of a decedent must be filed with the county clerk’s office in the county where the maker of the will or testator died. The filing must take place within 30 days of the testator’s death or knowledge of the death.

When an estate plan contains a trust, the trustee – who may or may not be the executor – must let heirs know of the document’s existence. California laws require heirs to be notified about trusts within 60 days of a death.

To be clear, the words “heir” and “beneficiary” sometimes are used interchangeably, but there is a difference. Heirs are members of a family entitled to an inheritance. Spouses, children, siblings and parents top the list. Uncles, aunts and cousins are also considered heirs, when applicable. Anyone who inherits without holding one of these titles, an unrelated person or distant relative, is known as a beneficiary.

Fiduciaries come in all levels of competency from unprepared to uncertain to professional. Through ignorance or willfulness, some fiduciaries breach duties toward people they have promised to benefit. The loss of trust between an executor or trustee and heirs easily can lead to a court battle like a will contest. The costs for resolving problems in court may shrink the estate.

Heirs and beneficiaries are often advised to retain an estate planning attorney to understand their rights of inheritance. Counsel is also appropriate when concerns arise about a fiduciary’s actions.

Source: blogs.sacbee.com, “When is notice required to be given of the existence of a will or trust?” Claudia Buck, Sep. 01, 2013

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You don’t have to be a television, movie or music legend in Los Angeles to want control over inheritances you leave for heirs. If you think your estate plan is fine without a trust, you might be right. Then again, you might be missing something.

Trusts are legal workhorses designed for particular purposes. More than one kind of trust is available, depending on how you’d like your estate administration to be handled.

What can a trust do that other estate planning instruments cannot? No attorney will suggest that a trust replace a will, living will or power of attorney. Those documents form the foundation of an estate plan. Trusts elevate the power an individual has over asset distribution and protection from probate, taxes and creditors.

Federal estate tax worries are not a problem for the majority of California residents. At least for this year, the IRS won’t become interested unless an estate’s value is at least $5.25 million. So, why bother with a trust when taxes are no problem?

Wills are public records and trusts are not. Assets placed in a trust no longer belong to an individual, although a grantor – person who establishes the trust – can maintain control over the parked assets during life as a trustee and beneficiary.

A revocable living trust allows a grantor to change his or her mind about the trust’s contents or the trust itself. A manager is designated to take control the trust when the grantor becomes incapacitated or dies.

Trusts are helpful for parents who wish to control the flow of assets to children by staggering distribution over years or decades. Single individuals may benefit from the establishment of a trust as well as people with complicated relationships, like multiple marriages and children from previous relationships.

Trusts aren’t necessary for everyone but can be useful for anyone, rich or not-so-rich, depending on estate planning goals.

Source: miamiherald.com, “Age-old question: Do I need a trust?” Julie Landry Laviolette, Aug. 23, 2013

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The parents of baby boomers have reached an advanced age. The children of the World War II generation are baby boomers. Members of the country’s largest-ever generation were born between 1946 and 1964, which means some Los Angeles boomers are already grandparents living in retirement.

The boomer generation is becoming aware of the importance of estate planning through the deaths of their parents. Unfortunate but unavoidable mortality forces boomers to consider what they want to leave behind for heirs and beneficiaries in a will or trust.

Some strategies boomers use to create or update estate plans will depend on experiences they have or had as heirs. For example, the boomer heir of a parent who dies intestate – without a will – may be forced into a probate battle with family members. No one wants someone they love to have that asset-depleting, energy-exhausting experience.

Boomers may be less likely to hold back on sharing estate planning information than their parents were. A person unpleasantly surprised by a parent’s final wishes is likely to make sure his own children are not shaken up when they become heirs. Most people do not want estate plan aftershocks like the sudden job of a fiduciary.

Children of boomers should ask parents about eventual financial wishes. Estate planning attorneys recommend approaching the subject from a viewpoint that benefits parents. Asking about the existence and location of a will is not greedy. The knowledge is helpful to people assigned to distribute the parents’ assets.

Discuss parental incapacity; it’s a common situation for aging parents. Adult children must be aware of parents’ health and financial choices, in case the day comes when parents are incapable of making those decisions.

Estate planning issues are sensitive. Sometimes the best generation-to-generation inheritance discussions are in the presence of a legal adviser, who can make the interchange comfortable and productive for both sides.

Source: mainstreet.com, “Estate Planning for the Echo-Boom Generations” Steven Orlowski, Aug. 19, 2013

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California parents who keep contents of their estate plans confidential aren’t doing heirs any favors. Children can be disappointed, and sometimes angered to the point of litigation, by making assumptions about inheritances or roles as fiduciaries.

A person designated as an executor or a trustee is charged with numerous time-sensitive, detailed jobs. A biological connection to a decedent does not give a person magical powers to carry out estate responsibilities effectively. An adult child simply may not be right for the job.

The job description of an executor may include just a few duties or obligations that take months or years to complete. Ability, patience and desire are qualities required. A family member has an emotional stake in the outcome of an estate plan. Those feelings cannot interfere with the important duties at hand.

Among other jobs, an executor’s must initiate the probate process in court, tally and value estate assets, pay off debts and file taxes. The ultimate goal is to prepare the estate for distribution to beneficiaries. Deadlines are crucial and disputes among beneficiaries must be handled properly.

Many people feel it is an honor to be trusted with handling an individual’s final wishes. It is also essential to acknowledge that not everyone can and wants to do the work of a fiduciary.

Talk with a potential designee at length before adding an administrator’s name to an estate plan. Be grateful rather than resentful when someone is honest enough to disqualify themselves from the role of executor or trustee. The job must be filled by a competent, willing person.

Tradition often drives the decision to have an adult child take responsibility for a parents’ estate. A fiduciary can be any trusted representative, even someone who is not a relative. Third parties like trust companies, banks and attorneys offer objective estate management without the emotional involvement family members have.

If you have questions regarding estate planning, contact a California estate planning attorney. Your attorney can help you with the legal documents needed to help make things easier on your loved ones after you pass.

Source: capitalgazette.com, “Savvy Senior: How to choose the right executor for your will” Jim Miller, Aug. 11, 2013

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Last year at this time, Los Angeles estate planning attorneys were concerned about protecting clients’ assets from potentially high taxes. Fears that the IRS tax-free part of an estate would drop from above $5 million to $1 million were unfounded. Federal estate taxes did rise to 40 percent but not to 55 percent as was predicted.

When lawmakers made the tax changes permanent, the focus of estate plans began to shift. Many legal experts say estate planning clients at every level of wealth have become worried about probate.

Assets may differ in probate estates and federal tax estates. The IRS plays by its own rules to judge property, and tax what an estate is worth. Probate is handled at a state level. The process essentially ties up a decedent’s financial loose ends, like settling unpaid debts and asset title transfers to beneficiaries.

Probate may be necessary even when a decedent has a valid will. All California estates containing assets of more than $100,000 go before a probate judge. With proper legal preparation and representation, the probate process should not be as long, costly or stressful as many heirs imagine.

When an estate is kept out of probate, the contents remain private. Assets that are not reviewed in probate like life insurance, 401(k) plans and IRAs move straight to beneficiaries.

A revocable living trust may be used to prevent assets from moving through probate. The trust, not an individual, becomes the assets’ owner. In many cases, the person who created the trust serves as trustee and trust beneficiary. The set up can stay this way throughout the creator’s lifetime or can be changed or revoked at will.

An estate planning attorney may advise using probate to its best advantage rather than trying to ignore the process altogether. The only way to find out what works best in your situation is to speak with your legal consultant.

Source: investingdaily.com, “To Avoid Probate or Not?” Bob Carlson, Jul. 31, 2013

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A Los Angeles parent with adult children is incapacitated by severe illness. The children are uncertain whether estate planning documents exist, including powers of attorney that permit someone to manage the parent’s finances or health care decisions. The children don’t know whether the parent has made a will or where to begin looking for one.

An estate plan and communication with heirs would have prevented legal and emotional confusion. What can the children do, other than searching blindly for legal papers?

No assumptions can be made about the parent’s estate until the children find out what, if any, plans a parent has made. The first step is to contact the parent’s attorney. The parent also may have designed an estate plan without legal assistance, in which case the scramble for documents is far from finished.

The contents of an estate plan can remain as private as an individual chooses, but secrecy has drawbacks. Attorneys strongly encourage clients to provide family members with instructions for possible incapacity or death.

A legal directive is needed to allow someone to make decisions for an individual who cannot. Powers of attorney, wills and other estate planning documents can be drawn up from a hospital bed, but waiting until then is discouraged. A decedent’s mental capacity can come into question during a will dispute.

Children uncertain about a parent’s last wishes must tread carefully. A biological relationship does not give a child the right to act automatically in the parent’s stead. There are no default agents, executors or trustees. The estate plan creator or a court makes these choices. A willingness to handle these jobs is not the same as having the legal right to do so.

Attorneys emphasize pre-planning for good reason. A person’s last wishes deserve to be honored. Directions must accompany an estate plan for a decedent’s desires to be fulfilled.

Source: napavalleyregister.com, “Successor trustees and beneficiaries” Len Tillem and Rosie McNichol, Jul. 25, 2013

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