ESTATE PLANNING

Published on: July 18, 2014

How to Self-Prove a Will

A last will and testament is a legal document that must be filed with a probate court after your death. California law normally requires a will must be signed by the maker (testator) and at least two other persons as witnesses. The witnesses need not read or understand the contents of the will, but they must witness the testator’s signature and his declaration that the document is, in fact, intended to serve as a last will and testament.

In most cases, the witnesses play no further role once they have signed the testator’s will. But if a dispute emerges after the testator’s death, a probate judge may require one or all of the witnesses to testify as to the authenticity of the will. Since it may be difficult to locate witnesses what may be years after the fact, California and most states permit what are known as “self-proving” wills. A self-proving will includes an affidavit-that is, a declaration witnessed by a Notary Public-attesting to the authenticity of the document. In other words, the affidavit “proves” the will is authentic without the need to locate and produce the witnesses.

Dealing With Deceased Witnesses

Published on: July 16, 2014

What Is a “Small Estate”?

by Scott C. Soady

Not every estate requires a formal probate process. Most states, including California, have simplified procedures for administering “small” estates. The actual definition of a small estate varies from state to state. California law defines a small estate as one where the real and personal property owned by the deceased, valued as of the date of death, does not exceed $150,000. Some types of property are excluded from this $150,000 threshold, including unpaid salary or benefits owed the deceased (up to $15,000) and many types of vehicles.

In a regular estate, a probate court must appoint a personal representative or executor to gather the decedent’s assets and distribute them to the appropriate heirs or beneficiaries. In a small estate, by contrast, the person entitled to receive those assets may simply file an affidavit with the court acknowledging the transfer of ownership. There are separate processes for collecting personal and real property.

If the Small Estate Includes Only Personal Property

Published on: July 14, 2014

Does Your Will Contradict Your Prenuptial Agreement?

by Scott C. Soady

A last will and testament is just one document that may govern the disposition of property after your death. Many married couples sign a prenuptial (or antenuptial) agreement that can also affect estate planning. For example, spouses may agree to waive any future claim on each other’s estate. This may be useful in cases where a spouse wants to leave part of his or her estate to children from a prior marriage.

But if documents are poorly or incompletely drafted, legal confusion may frustrate your objectives. A recent decision by an appeals court in Mississippi illustrates what can go wrong when a will says one thing, but other documents say something else.

Dixon v. Jones

Published on: June 24, 2014

Transferring Corporate Shares Via Estate Planning

by Scott C. Soady

A family-owned business poses unique estate planning challenges. If the business is organized as a corporation, certain formalities must be observed with respect to the transfer of ownership upon a shareholder’s death. Under California corporations law, every shareholder, even if it is a family member, must receive a certificate specifying the number and type of shares owned. When a shareholder dies and transfers shares by will or trust to a beneficiary, the corporation must record this transaction and issue certificates to the new shareholder.

In theory this sounds simple enough. But in practice things can and do go wrong. A recent court case from Ohio illustrates this.

Graham v. Szuch

Published on: June 13, 2014

Understanding the Difference Between Trust and Personal Assets

by Scott C. Soady

A living trust is an estate planning device whereby a person, known as the “settlor,” transfers his or her assets to the custody of a trustee. In most living trusts, the settlor and trustee are the same person. When the settlor dies, the trust instrument appoints a successor trustee, who then manages or distributes the trust assets as the settlor directed.

If you decide to create a living trust, it is essential that you and your successor trustee observe all appropriate formalities. That is, when dealing with trust assets, you must not refer to yourself as the owner, but rather the trust. Let’s say John Doe creates a living trust. He wishes to fund the trust with his home. In order for the house to be considered a trust asset, Doe must file a deed transferring the property from himself to “John Doe, Trustee of the John Doe Revocable Living Trust.” Failure to take this step means a court may decide the asset was never part of the trust.

Avoid Co-Mingling Trust Assets

Published on: June 4, 2014

Understanding Death and Taxes

by Scott C. Soady

Benjamin Franklin famously wrote, “in this world nothing can be said to be certain, except death and taxes.” And the latter does not cease upon the former. Death introduces a number of tax issues that must be dealt with as part of your estate. Proper estate planning can help ease the burden, however, and minimize tax difficulties arising from an uncertain world.

Income Taxes

Your estate must still file a final individual income tax return-the common federal Form 1040 or California Form 540-for the tax year you die. This return should only reflect the income and deductions accrued through the date of death. Any income or losses earned after your death are credited to your estate.

Published on: May 23, 2014

Estate Planning and Tax Issues for Heirs

by Scott C. Soady

Taxes are an important part of estate planning. While most people associate estate planning with the desire to minimize federal estate taxes, this will not actually be an issue for most individuals, as the estate tax presently applies only to those estates with more than $5.34 million in assets. But there are other tax issues even smaller estates must consider.

For example, if you plan to leave significant assets to family members, you should consider how it will affect their taxes going forward. A qualified California estate planning attorney can advise not only you, but your potential heirs, on the best way to minimize total tax liability and avoid pitfalls that may prove costly years after your death.

Zampella v. Commissioner of Internal Revenue

Published on: May 22, 2014

Failing to Leave a Will Can Cause Confusion Among (Alleged) Heirs

by Scott C. Soady

Many people fail to make a last will and testament because they simply assume their heirs, such as a spouse or child, automatically inherit their property under the law. While it is true the law provides for persons who die intestate-that is, without a will-it is never a good idea to rely on this process, as it may produce outcomes you do not intend. This is especially true when dealing with atypical family situations.

Jones v. Brown

Here is a recent illustration from the California Court of Appeals. Lonza Jones died in 2009 at the age of 81. Jones had one surviving sibling, Mathis Jones. Another sibling died several decades earlier; Lonza Jones raised that sibling’s children, including Elinda G. Edwards.

Published on: May 18, 2014

Florida Justices Warn of the Dangers of Estate Planning Without an Attorney

by Scott C. Soady

Many people think they will save time and expense by using pre-printed forms to meet their legal needs such as a last will and testament. But pre-printed forms carry significant risks, especially when individuals fill them out without obtaining the advice of an experienced California estate planning attorney. In fact, the Florida Supreme Court recently warned people of the risks of using pre-printed wills in a decision that illustrates the perils of relying on commercial forms.

Basile v. Aldrich

In April 2004, Ann Aldrich purchased a commercial pre-printed last will and testament form. She prepared the form herself, apparently without any legal advice. Under a section marked “Bequests,” Aldrich identified several specific items of real and personal property. She left all of the listed property to her sister, Mary Jane Eaton. Aldrich named her brother, James Aldrich, as alternate beneficiary of those particular assets if her sister did not survive her. Aldrich apparently had no children or heirs aside from her two siblings.

Published on: May 16, 2014

Disposing of a Sole Proprietorship in Your Will

by Scott C. Soady

An often overlooked part of estate planning is business succession. If you own and operate your own business, it is essential your estate plan make provisions to either wind-up the business upon your death or transfer those assets to a designated successor. This is especially true if your business is not incorporated-that is, you operate a sole proprietorship or even a one-member limited liability company.

Separating Business and Personal Assets

A recent case from the Georgia Supreme Court is instructive. Robert Haege died in 2006. Haege operated an art business under the name Traditional Fine Art, Ltd. In his will, Haege left his “personal assets” to his siblings and his “business assets” to his siblings and two of his employees.