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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The youngest members of the baby boom generation are celebrating the last year of their 40s. First-born boomers entered retirement age two years ago; they turn 67 this year. The massive generation adds to the 65 and older population at the rate of 10,000 people per day, providing estate planning attorneys with a vast potential client list.

The truth is most people in Los Angeles and across the U.S. do not have complete estate plans. Estimates say that fewer than half the nation’s adults even have a will. Boomers advancing steadily into old age may or may not continue this disturbing trend.

Baby boomers are different than the people born before them. The tens of millions of post-World War II babies born in the U.S became the country’s largest generation. The boomers now consist of parents and grandparents with beneficiaries ready to inherit significant wealth.

Advances in health care, personal fitness and technology have made it possible for boomers to live longer than their predecessors. Elderly boomers of either gender are expected to live well into their 80s. A pressing need exists for estate planning documents to cover advanced age care, incapacity and asset protection and distribution.

Despite anticipated longevity, the 65 and older crowd has a greater chance to develop incapacitating conditions than younger individuals. Estate planning tools like revocable living trusts and powers of attorney allow trusted parties to take over medical and financial decisions for individuals robbed of the power to make them.

Well-rounded estate plans consist of wills, trusts and other instruments that provide lucid directions for estate fiduciaries and courts. Lawyers help individuals protect assets from unnecessary taxation and litigation.

Estate plans are not once-and-done documents. Legal experts recommend reviews at least every five years and sooner when life-changing events occur like an out-of-state move, the loss or birth of a relative, marriage or divorce or changes in health.

Source:  wealthmanagement.com, “The Golden Age of Estate Planning” Richard A. Behrendt, Jun. 07, 2013

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The word “executor” sounds like a title that could enhance a resume. In fact, a person who can handle the responsibilities of a California executor is probably well qualified for many jobs. Estate administrators known as fiduciaries have immense responsibility to a decedent, beneficiaries and probate court.

The executor of a simple estate may have little to do compared to a fiduciary who is accountable for complex assets and liabilities. Copious financial and legal knowledge or advice, time and effort are required when estates are elaborate.

Civil laws oversee the duties of executors. An executor is charged with carrying out a decedent’s wishes while treating beneficiaries fairly. Estate administration errors constitute a breach of duty that is subject to investigation and legal action.

What do executors do? The first task involves tallying assets, a job that is made easier or harder depending on instructions – or lack of them — within a decedent’s estate plan. Estate settlement also involves meeting court deadlines and resolving debts, filing taxes and distribution of property.

Executors may be involved in the settlement of a complex estate for several months, even years. The work can include pay, although family members who assume a fiduciary position often forego the fee.

Becoming an executor is a privilege that also demands a financial skill set. Fiduciaries in over their heads frequently depend on the advice of estate planning professionals.

When is it a good idea to turn down an executor request? The answer varies according to personal tolerance and an estate’s complexity. Consider whether you are capable of or willing to delve deeply into a decedent’s real estate holdings, business assets or family disputes.

Estate planning attorneys know that some executors are completely competent when it comes to crunching numbers and meeting legal deadlines. Regrettably, some fiduciaries fall short when it comes to finding diplomatic and court-approved solutions for unhappy heirs and beneficiaries.

Source:  golackawanna.com, “Serving as executor is no easy task” Pamela Yip, Jun. 02, 2013

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Family power struggles at the time of a loved one’s death are not so common that they disrupt the settlement of every estate, but conflicts happen. Legal issues among Los Angeles heirs and beneficiaries often occur when no estate plan exists or a critical legal document is indistinct.

Estate administration complexities deepen when a wealthy or famous person dies intestate — without a will. Information that the decedent may have hoped to keep private is noticed by the public. Asset division becomes a probate judge’s job.

Rap artist Heavy D, born Dwight Myers, died in 2011. Media reports and family member statements were unclear about whether the 44-year-old passed away with a valid will. The rapper’s estate remains in probate.

According to the late performer’s mother, Heavy D’s teenage daughter will be the sole recipient of his property including royalties from the rapper’s work. A recent report hinted the artist’s brother was challenging the claim.

Floyd Myers submitted a probate petition in Los Angeles. The siblings’ mother said the filing did not signify an internal battle. Floyd and Heavy D apparently shared ownership of a condominium, which the surviving brother now wants to sell. The legal paperwork follows statutes that require court notification.

Heavy D’s family said probate was overseeing the estate. The late rapper’s 13-year-old daughter would be in line to inherit her father’s worldly wealth even without the existence of a will, according to state succession statues.

The family said it supported the idea of making Floyd Myers the estate representative. It appears Heavy D’s estate plan — if a plan was ever created — designated no such person for the position.

Not all jointly owned property must pass through probate when one owner dies. Whether a probate court gets involved depends on how asset ownership was originally structured. Duties of a surviving property owner can be explained by an estate planning attorney.

Source:  allhiphop.com, “Heavy D’s Mom Addresses Reports Of Fight Over His Estate” Yohance Kyles, May. 22, 2013

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