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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Advancements in computer technology have dramatically changed all aspects of society. It has even made a significant difference in estate planning strategies. Now with the advent of digital assets, those looking to create an estate plan in California will have to be up-to-date on all of the legal implications of owning digital assets.

One of the most recent technological advents which has caused some confusion in this realm is bitcoin. There has been an ongoing battle over whether to classify bitcoin as a currency or as property. The Internal Revenue Service (IRS) has decided to recognize bitcoin as property rather than as currency, in accordance with IRS Notice 2014-21.

This is important to consider when creating an estate planning strategy because it means inherited bitcoin is valued at the fair market value for tax purposes. Therefore, this can change how capital gains taxes are applied once a beneficiary decides to spend his or her bitcoin. Those who hold bitcoin which has appreciated in value may want to hold onto the bitcoin for heirs, while those with depreciated bitcoin may want to spend the bitcoin as soon as possible.

It is also important to inform an executor or trustee about the existence of bitcoin that one owns. This means one will have to make sure the executor or trustee will have access to one’s private key or password to one’s bitcoin wallet. Without this access the trustee or executor will not be able to distribute one’s bitcoin as instructed in one’s will. It is also important to give access to one’s appointed agent in his or her power of attorney document.

On the other hand, each person in California has different estate planning goals. These goals should always be the guiding principles for making decisions when creating an estate plan. Therefore, each estate plan should be customized to fit individual circumstances. Also, it is important to stay up-to-date on any changes to the law regarding estate administration, especially to any changes in the classification of bitcoin for tax purposes.

Source: coindesk.com, “5 Things Bitcoin Owners Must Do When Estate Planning“, Jeff Vandrew Jr., July 28, 2015

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Actor James Gandolfini was worth an estimated $70 million at the time of his death. Reports said the star of the HBO series “The Sopranos” left behind a will that passed the bulk of his fortune to a baby daughter and siblings. Critics felt estate planning mistakes cost the late actor’s heirs tens of millions of dollars.

California estate plan goals include arranging wealth so loved ones’ assets are not depleted by needless taxes or probate litigation. According to sources who claimed to have viewed Gandolfini’s will, federal taxes will cut the estate’s value by approximately $30 million. Gandolfini’s daughter and sisters could receive 80 percent of $40 million not $70 million.

The assets left to the actor’s widow apparently fell under the remaining 20 percent. Gandolfini could have left the entire estate to his spouse tax free. The privilege spouses have in estate settlements does not extend to other family members.

A $7 million life insurance trust will benefit Gandofini’s teenage son. The proceeds are excluded from federal taxation. A significant share of the daughter’s inheritance will be distributed when she is 21, an age some estate planning advisers say could be too young to handle great wealth.

The boy and his sister will come into property in Italy when the now-9-month-old girl turns 25. The property may be a hardship for the siblings if their father did not set aside funds for property maintenance, foreign legal issues and taxes.

A revocable trust would have permitted the 51-year-old actor to keep the distribution of his estate private. The trust would have been easy to alter as relationships and other circumstances changed during Gandolfini’s lifetime.

Attorneys guide the use of estate planning documents by providing advice and options to safeguard wealth. Individuals make the final decisions about estate handling with or without concerns for tax advantages or privacy.

Source: forbes.com, “6 Estate Planning Lessons From James Gandolfini’s Will” Robert W. Wood, Jul. 20, 2013

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Parents of a disabled child often worry how to set up an estate plan that provides an inheritance without disqualifying the child from valuable government benefits. Estate planning trusts can be designed to help a special needs beneficiary without sacrificing Supplemental Security Income or Medi-Cal, the California Medicaid program.

Qualification for SSI and Medi-Cal benefits is dependent upon income. A disabled beneficiary who comes into even a modest inheritance can be dropped from the programs for exceeding low income requirements.

Special needs trusts allow parents to establish a safe haven for assets that do not count against a child’s income-sensitive benefits. A third-party special needs trust houses assets owned by the trust. A disabled child’s government benefits cannot be penalized because the beneficiary does not own or control the assets.

A trustee is assigned to manage the assets on behalf of the special needs beneficiary. The trust may not provide the child with cash since that would be considered disqualifying income. The trust can be used to supply services including education and even housing for the disabled beneficiary without breaching benefits’ guidelines.

Parents with limited financial resources may consider a pooled trust. Assets are grouped together with other grantors under a single trust. The trustee is a nonprofit organization working for the good of all beneficiaries rather than one.

A first-party special needs trust is also an option for beneficiaries who receive income. Legal settlements or damages, gifts or other assets belonging to the disabled child fund the trust. Assets in first-party trusts may threaten benefits’ eligibility or be claimed by the government upon the beneficiary’s death.

An estate-planning attorney can answer questions about special needs trust options, the choice of a suitable trustee and trust-funding strategies. Due to legal complexities, parents are not advised to attempt to create a special needs trust without an attorney’s help.

Source: thefiscaltimes.com, “Estate Planning Guide for a Special Needs Child” Sonya Stinson, Jul. 10, 2013

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This question can only be answered by you as a testator, the will creator. The decision to designate a spouse or other relative as the executor of your estate depends on the qualities, abilities and willingness of the family member.

An estate planning attorney would not recommend forcing the job of a California executor on anyone who doesn’t want it or someone who is incapable of the work. Spouses and adult children seem like the logical default for the job, but that doesn’t mean they are the best qualified.

An executor juggles multiple responsibilities with the ultimate goal of dividing estate assets among beneficiaries. Time-consuming and deadline-oriented duties lie between a person’s death and property distribution.

The person chosen as the executor of a California estate must file a petition with the court to confirm the will is legitimate. At the same time, heirs are given notice of the testator’s death.

An accounting of vital documents, estate assets and liabilities is necessary, which a testator can expedite by including instructions in an estate plan. Debts must be settled and accounts closed. Notification of the person’s death must be shared with applicable financial and government institutions, including the Internal Revenue Service.

A family member may or may not be reliable or skilled enough to handle the detailed tasks. Other options for executor choices include trusted friends and financial or legal professionals. Executors are paid, although relatives or friends of a decedent often turn down the fee, frequently because they are also beneficiaries.

Desire must match qualifications for an executor. Some relatives may not want the fiduciary responsibility, especially when the estate is complex. In some cases, relatives turn down the job to avoid possible family disputes or legal challenges over the estate.

Executors who are family members do not have to perform the duties alone. Financial and legal advisers can assist in settling the estate.

Source: edmonsbeacon.villagesoup.com, “How to choose the right executor for your will” Jim Miller, Jul. 03, 2013

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Los Angeles estate planning attorneys just got very busy. In one fell swoop, the U.S. Supreme Court threw out the Defense of Marriage Act and shot down Proposition 8 in California. Gay couples who reside in the state now can marry and gain federal financial benefits that were once denied to them.

The high court’s dual decisions have a tremendous, positive impact on estate planning for married gay couples. Partners who had gone to legal extremes to try to preserve assets for a loved one can rest a bit easier knowing that protection under federal and most state laws include them.

Some members of the gay community will not benefit from the justices’ ruling — same-sex partners who choose not to marry and, in part, couples living in states where gay marriages is still unrecognized, banned or both. Thousands of altered federal laws will apply to married same-gender couples even in states without legal gay marriage.

How far did gay married couples go to save their partners from heartache and extraordinary expenses in estate planning? A 65-year-old gay man in Pennsylvania – one of over 30 states that do not allow gay marriage – formally adopted his 73-year-old partner. Without adoption, the partner could have been on the hook for a 15 percent state inheritance tax. With adoption, the now-legal heir will be responsible for a four percent tax on the estate.

California gay couples no longer have to go to such unusual lengths to provide for one another during incapacity or after death. Everything from wills and trusts to income and estate tax breaks and end-of-life medical decisions changed for gay couples when DOMA and Prop 8 died.

California estate planning attorneys have anticipated the changes in the laws at the state and federal levels. Lawyers are prepared to help gay couples create and update estate planning documents to care for their newly-legal loved ones.

Source: abcnews.go.com, “Gay Man Adopts His Partner to Avoid Inheritance Tax” Susan Donaldson, Jun. 28, 2013

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What excuses do people in Los Angeles use to avoid making an estate plan? The same excuses people across the U.S. employ. If your internal argument includes “I’m too young to think about death” or “I’m not wealthy enough to make a will,” then it’s likely you may die intestate.

While dying without a will has no effect on a decedent, it can wreak havoc on heirs, beneficiaries and courts left to sort out a legal mess. The absence of estate planning documents gives the state permission to divvy up property according to succession laws that may not align with your true wishes.

Wills are relatively inexpensive ways to prevent legal chaos and family infighting over an estate or minor child guardianship. Powers of attorney direct health and finances in the event of a person’s incapacity. Trusts provide control over asset distribution and management before and after death.

Beneficiary designation is one of the most crucial components of an estate plan. Many parents feel children should share assets equally, but not all beneficiaries use inheritances wisely. For example, an inherited family business can be destroyed within a generation by siblings with opposing financial priorities.

Many people forget about the importance of beneficiary designations. The recipient of 401(k) proceeds will be the person named as beneficiary in the plan even when someone else is listed as beneficiary in a will. To avoid conflicts, estate planning attorneys recommend creating and updating beneficiaries in both places at the same time.

An estate plan created at age 30 cannot predict future events. Estate plans must keep up with life shifts like asset acquisitions or losses, the addition of children and marriage or divorce.

Lawyers suggest creating an initial estate plan that reflects personal and financial circumstances for a two- to three-year period. The limitation forces an individual to revisit the plan regularly to make sure estate desires remain current.

Source: foxbusiness.com, “Why You Need an Estate Plan” Donna Fuscaldo, Jun. 21, 2013

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The California estate of Hugette Clark remains unresolved two years after the 104-year-old woman’s death. Multiple parties, including relatives of the last descendent of a $300 million copper mining fortune never knew, are disputing two wills Clark left behind.

A probate court will decide this fall whether Clark died without a valid will. In that case, a court-appointed estate administration would be required. Clark was 98 when she signed the first will and, a month later, a second will. The asset distribution terms within the documents are entirely different.

The first will contained instructions to split Clark’s vast fortune among 21 relatives so distant that she could not name them. The second will had no mention of the relatives.

The second document ordered the estate to be shared by a caregiver, a goddaughter and a yet-to-be established $125 million foundation at one of Clark’s three mansions. The foundation at the Santa Barbara property would contain Clark’s massive doll and art collections, minus a $25 million Monet painting which would be donated to a museum.

Depending on a probate court’s ruling, the relatives could receive everything or nothing that Clark left behind. Should that occur, the relatives’ portion of the estate might be severely depleted by estate taxes and legal expenses.

Disputes center on Clark’s soundness of mind when she signed the wills. In most cases, a six-year gap between the creation of a will and death would not raise red flags. Clark’s mental capacity at 98 could be questioned.

The way estate plans are designed and worded can prevent family members and other beneficiaries from wasting time and money on needless litigation. Provisions included within wills like no-contest clauses can help discourage legal challenges.

A well-established revocable trust discourages legal claims and shields assets from probate. To avoid further problems, attorneys often recommend naming someone other than a family member as the trustee of a revocable trust.

Source:  nytimes.com, “How to Avoid an Estate Battle After You Die” Paul Sullivan, Jun. 14, 2013

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