ESTATE PLANNING

Published on: February 2, 2016

How Do You “Prove” a Will is Valid?

After your death, your will provides an estate planning roadmap for distributing your property to your chosen beneficiaries. You may be wondering how a probate court will know whether or not a particular document is actually your will. In other words, how does one go about proving a will is valid?

California, like all states, requires a will to be signed in the presence of at least two witnesses. The reason for this is to maximize the chance that at least one person—one of the witnesses—will be available to authenticate the will as valid should a dispute arise. Of course, since you may sign your will years (or decades) before your death, what happens if the witnesses are difficult to locate or unavailable?

One solution is to incorporate a “self-proving affidavit” into the will. This is a notarized document signed by the person making the will, together with the witnesses, in which they all affirm, under penalty of perjury, that the accompanying will is genuine. Most states will accept such an affidavit as proof of a will’s validity without the need for live witness testimony.

Published on: January 30, 2016

What Happens to My Estate Plan if My Child Dies Before Me?

by Scott C. Soady

No parent wants to contemplate losing a child. But from an estate planning perspective, you should anticipate how you wish to handle your own affairs in the event a child does not outlive you. Addressing these contingencies up front can help avoid misunderstandings after your death as to your wishes.

Per Stirpes Distribution

For example, suppose you are currently married and have three children. You sign a will that provides if you die and your spouse does not survive you, then your entire estate should be divided equally among your three children. Assuming all of your children are alive at the time of your death, it should be a relatively straightforward matter for the executor of your estate to gather your assets and divide them into three equal shares, one for each child.

Published on: January 29, 2016

How Language in a Will Can Affect the Distribution of an Estate

by Scott C. Soady

Clarity is important when drafting a last will and testament. Your executor must be able to understand your intentions with respect to the disposition of your estate. Likewise, the beneficiaries named in your will have a right to know what they are entitled to. When imprecise terminology is employed, it may lead to confusion, which in turn can lead to litigation.

Wife Ordered to Honor Husband’s Charitable Gifts

Here is a recent example from here in California. This case is only an illustration and not a definitive statement of the law. The deceased in this case made a last will and testament several months before his death in late 2010. The will named the decedent’s second wife as executor and directed she would receive the residue of his estate, including mutual funds, checking accounts, stocks, and so forth. The will also made gifts of “up to” certain specified amounts to the decedent’s first wife and various charitable organizations. For example, the will directed the executor to “leave up to $150,000 from the proceeds from my mutual funds, stocks, cash, and bonds to the [U]niversity of [C]olorado [S]chool of [B]usiness in [B]oulder.”

Published on: January 23, 2016

Using a Trust to Provide for Your Family and Charity

by Scott C. Soady

Estate planning and tax planning often go hand in hand. There are many estate planning devices which allow you to (legally) obtain tax benefits. One example is a charitable remainder trust, which is a special type of estate planning trust that can provide an immediate tax benefit for you while guaranteeing future income for your family and, ultimately, a favorite charity.

The Basics of a Charitable Remainder Trust

In any trust you transfer assets to a trustee. Most estate planning trusts are revocable, meaning you can amend or even revoke the trust outright at any point during your lifetime. But some estate planning trusts must be irrevocable—that is, you must surrender all control over the assets to the trustee—in order to receive certain tax benefits. A charitable remainder trust is such an irrevocable trust.

Published on: January 22, 2016

Apple Reportedly Demands Court Order Before Releasing Deceased User’s Password

by Scott C. Soady

You might think the most difficult part of estate planning would be figuring out how to transfer title to your house or administering a living trust. But for a British Columbia widow, one of the biggest hassles she faced following her husband’s death was gaining access to his Apple account. The California-based technology giant reportedly demanded a court order before it would release the password to the couple’s joint online account.

According to report from the Canadian Broadcasting Company, the widow noticed a game had stopped working on her iPad. It turned out she needed to login to her Apple account, but her husband was the only one who knew the password. The widow’s daughter contacted Apple, but she said customer support gave her the runaround. Nearly two months later, after providing copies of the husband’s death certificate and other personal identifying information, the daughter said Apple told her she needed to get a court order. The family declined to do so due to the cost, but the family told their story to the CBC, Apple acknowledged there was a “misunderstanding” and promised to resolve the issue.

Taking Inventory of Your Digital Assets

Published on: January 14, 2016

How Should I Deal with Copyrights, Patents, and Trademarks in My Estate Plan?

by Scott C. Soady

Your estate plan is designed to dispose of any property you own at the time of your death. Property can include not just financial assets, real estate, and tangible items, but also the legal rights to certain works you have created or invented. These intellectual property rights can be quite valuable, which is why it is important to include them in your will or trust.

How Intellectual Property Works

There are three broad categories of intellectual property protected under federal law: copyrights, patents, and trademarks. Each follows different rules and can impact your estate planning in varying ways.

Published on: January 5, 2016

Dealing With Non-California Property in a California Trust

by Scott C. Soady

Estate planning is especially important when you own property in more than one state. Although your will is generally subject to the law of the state in which you reside at the time of your death, there may be a need to open an additional (or “ancillary”) estate in any other state where you own real estate or other property outside of California’s jurisdiction. In some cases, your estate may be liable for another state’s taxes.

Brothers Fight Over Nebraska Property in California Court

Here is a recent example. A California husband and wife created a living trust and transferred all of their property into it, including two pieces of farmland in Nebraska that the wife’s family had owned for more than a century. According to the terms of the trust, after the couple died, the trust’s assets were to be equally divided between their two children. The trust also required a division of the trust into “A” and “B” subtrusts after the first spouse died. This is a common estate planning tool used to keep the surviving spouse’s property in trusts separate and apart from the deceased spouse’s property.

Published on: January 2, 2016

Alleged Will Forgery Highlights Risks of Ignoring Estate Planning

by Scott C. Soady

You may not think having a last will and testament is important. But consider the possibility that if you do not make a will, someone else might create one in your name. While not common, will forgery does occur, and the internet makes it easier than ever for someone to present a fraudulent document to a probate court.

Arkansas Realtor Accused of Defrauding Estate of Deepwater Horizon Victim

Recently a federal grand jury in Arkansas indicted a woman for numerous criminal offenses arising from an alleged will forgery. The woman is also facing a civil lawsuit from the legitimate heirs of the deceased individual’s estate. Please note these lawsuits are merely allegations and have not yet been proven in a court of law.

Published on: December 31, 2015

Sale of “Soul Train” Host’s Home Leads to Estate Planning Nightmare

by Scott C. Soady

An important part of the estate planning process is taking inventory of what you own. If you own or operate a business, for example, you need to make sure it is clear which assets belong to the business and which belong to you as an individual. If you create a revocable living trust as part of your estate plan, it is imperative that any assets you move into the trust are properly re-titled in the name of the trustee.

If you fail to take these steps when creating your estate plan, there may be unnecessary delays or litigation involving your trust and estate. This can not only deplete any assets you wish to leave to your heirs, it can also place the people charged with carrying out your estate plan in danger of being held personally responsible if something goes wrong. A recent California case illustrates one such scenario.

Disputed Ownership, Boundaries May Leave Trustees Liable

Published on: December 17, 2015

How Can Estate Planning Affect My Children’s Property Tax Bill?

by Scott C. Soady

Estate planning has many tax implications. Even if you do not have an estate large enough to incur a federal estate tax bill—and that will be most of us—there are other tax issues to consider. For example, what happens to the taxable value of your house if you leave it to your children through a will or trust?

In California, property taxes are based on the assessed value of property rather than its market value. This is generally a good thing if you have owned your home a long time. Say you bought your house in 1995 for $100,000. Under California law, the assessed value may only increase 2% per year. This means the assessed value in 2015 would only be about $145,000. Meanwhile, the market value of the house if you sold it would likely be significantly higher.

When you sell or transfer a house, the assessed value resets for the new owner. So if you sell your house for $500,000, that is the new assessed value. But California law makes an exception when parents sell or transfer their homes to a child. Under this Parent-Child Exclusion, the assessed value does not reset when the child acquires the property. This means if you leave your home to a child in your will or trust, he or she will not have to pay higher property taxes than you did.