ESTATE PLANNING

Published on: August 19, 2012

Rapper’s Death Highlights Difficult Planning Decisions — Naming Child Guardians

Planning one’s long-term affairs usually spurs thoughts about designating who will get what in an inheritance and explaining end of life wishes. But, there is much more to consider. For example,

planning for residents with young children must include difficult decisions about the long-term care of their kids in the event of death or disability.

This issue made national headlines in recent weeks following the untimely death of former musician Adam Yauch. Yauch is best known as one of the founding members of the groundbreaking rap group,

Published on: August 18, 2012

Do You Need to Update Your Will or Trust?

by Scott C. Soady

When most local residents think of “estate planning” one document comes to mind–a will. By far the most common planning tool, a will lays out one’s wishes in the event of their passing. While millions still have not even taken this most basic step, more and more local residents have visited with professionals to have a will drafted to help guide their family in the aftermath of their passing. Also, in our area a growing number of residents have visited a San Diego estate planning attorney to have slightly more sophisticated tools created–a trust–to protect assets and save on taxes down the road.

But even those who took the time to create a will or trust must not put estate planning issues completely out of their mind. That is because these documents must be updated at certain times to ensure they work as expected at the moment they are most needed.

A recent Forbes article delved into some of these issues. There are many situations when changes need to be made. Maintaining a good relationship with a legal professional is one of the best ways to ensure you are made aware of times when your plan should be tweaked.

Published on: August 16, 2012

Adding a Child to a Bank Account? Think Twice

by Scott C. Soady

For many local residents, visiting a San Diego estate planning attorney seems unnecessary. After all,

many seniors have loving, supportive families and a desire to split everything evenly. Aren’t there easier ways to take care of inheritance and long-term care issues than visiting a lawyer?

One of the most common shortcuts involves adding an adult child to a bank account. The idea is that the child can help with financial issues in case something happens to the older parent. While this is always done with good intentions, there are many pitfalls to this approach which many do not consider until it is too late. A few of the more common problems include…

Published on: July 24, 2012

Taking Advantage of the Estate and Gift Tax Law

by Scott C. Soady

Much political debate raged in recent months (and years) about the federal gift and estate tax. While most of you have likely heard of the controversy, many of you are not exactly sure how these taxes could affect you and whether or not you need to do anything now to take advantage of current rates.

The Basics

The IRS defines the estate tax as “a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death”.

Published on: July 19, 2012

Should Spouses Have the Same Estate Planning Attorney?

by Scott C. Soady

When you are married, you start putting your own interests aside and consider what is best for both you and your spouse. Every time you make a decision, you must consider what is best for you, your spouse and any children you may have. Estate planning greatly impacts your family’s future and is one of the most important decisions you make together as a couple. Thoughtful estate planning is especially important for the well being of blended families –those comprised of a step-parent and step- or half-siblings.

For example, one scenario that typically occurs in a blended family upon the death of one spouse is that their significant other, their children, and step-children fight over the decedent’s estate. In order to avoid such a scenario, and other variations on that theme, we recommend you take careful measures in planning your estate and your spouse’s.

As touched upon in a Forbes article earlier this year, one initial issue couples must confront is figuring out whether they should get their own attorneys for estate planning purposes. Most couples consider it safe to share everything, including legal representation. However, as efficient joint representation may be –in terms of cost, time saving and mutual trust- it can also make things unpleasant for a couple in some cases, especially if husband and wife have underlying trouble (e.g., communication problems).

Published on: October 27, 2011

Debts Owed by Beneficiaries in an Estate Plan

by Scott C. Soady

Given the state of the economy, many people are giving loans to their children. While it is very generous of parents to loan money to their children, it can create several problems down the road. Most parents give money to their children but do not expect to ever be paid back. Even if the parents expect to be paid back many children do not make any payments on the loan or they consider it a gift that does not need to be repaid. This can can cause tension and resentment between those children who did not receive a gift or loan from their parents and those who did.

It also causes problems after the parents have passed away. Typically, the child who did not receive any money will expect their siblings share of the estate to be reduced by the amount of the debt. The child who did receive the money usually will say that the money was a gift or that it was paid back a long time ago. If disputes arise, it would be up to the probate court to resolve them.

If you do want to loan money to your children it is important to have the amount of the loan and the interest in writing. If it is not in writing, it is important to keep evidence of the amount that was loaned and whether any payments were received over time. The biggest problem occurs when the child stops making payments on the loan. The law has a statute of limitations, meaning that a claim for money must be brought within a specific time period. The statute of limitations on loans is six years after the due date of the loan. Therefore, if a child does not pay on a loan, the parents have to enforce the loan within six years of the last payment due date. Most parent will not sue their children for not paying on the loans while they are still living and thus the claim to the money by the parent’s estate will be barred by the statute of limitations.

Published on: September 22, 2011

Disinheriting a Child or Heir in a Will or Trust

by Scott C. Soady

The decision to disinherit a child can be very difficult for some people. Other people just want to give less to one child and more to another. There are usually valid reasons behind the decision and it is not one people take lightly. Most clients I see are reluctant to share their reasoning behind their decision. They think, correctly, that “they can leave money in their will or trust to whomever they wish.” However, it is very important to discuss your reasoning with your attorney. Once you pass away your estate planning attorney is in the best position to testify about the language and intent of your estate plan.

You intent is crucial to determine the validity of your will and trust if it is ever contested. Many people think, incorrectly, that a will or a trust cannot be challenged. However, any estate planning document can be challenged by a disinherited heir on two grounds. The first is undue influence, meaning that the person who benefited from the will or trust exerted too much influence over the person leaving them an inheritance. The only other ground is lack of capacity meaning that the person making the will or trust did not understand what they were doing when they executed their estate plan.

There are a few ways to prevent a contest of an estate plan. One is to have a ‘no-contest clause’, sometimes referred to as an ‘in terrorem clause’ in the will and trust. Basically this states anyone contesting the terms of the estate plan gets nothing. The other popular phrasing is the person contesting gets one dollar. The problem is these clauses only work if you give the person you are disinheriting something in the first place. I always advise clients who want to disinherit children completely to leave them some amount of money so that a disinheritance clause will work. The purpose of the clause is to take an emotional decision about being disinherited and making it an economic decision.

Published on: September 12, 2011

San Diego Power Outage Shows the Importance of Preparation in Estate Planning

by Scott C. Soady

The recent power outage in San Diego left the entire population of the county in the dark. Many people were unprepared and did not have basic resources including food, water and gas. Only after the power went out did people rush to the stores and gas stations only to find them closed as well. We are always told to be prepared but rarely to people heed that advice.

Preparation is also essential to estate planning. Many people wait until too late to draft a will, trust or power of attorney and the consequences can be disastrous. If you do not have an estate plan it can lead to very costly probate fees or result in other expensive court proceedings such as a conservatorship.

Even if you have a will or trust already, it is important to make sure they are updated. Most people make a will or a trust and then forget about it for years. Did your family member pass away? Is the person you named still capable of acting as trustee or executor? Were there any changes in the law that would effect your estate plan?

Published on: July 5, 2011

New York Times: Estate Planning: June 1, 2011

by Scott C. Soady

The New York Times has an article of what you need to know about estate planning and many other issues regarding wills, living wills, medical directives, special needs trusts, estate tax and more.

Estate planning can include guardianship, conservatorship, revocable living trusts, special needs trusts, irrevocable insurance trusts and many others. Estate planning is also useful for passing assets without probate when in a living trust. Most living trusts are revocable meaning that they can be changed or modified. This is important since there are changes in circumstances including births, deaths, divorce, legal separation,illness, disability and others which necessitate changes to the revocable living trust.
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Published on: May 31, 2011

Walt Disney’s Family Feud Show Common Issues in Estate Planning

by Scott C. Soady

Currently there is a feud going on involving two of Walt Disney’s grandchildren and their share of the huge Disney fortune. Walt Disney died in 1966 leaving two daughters and 10 grandchildren. One of his daughters Sharon Disney had married and then divorced a real estate developer named Bill Lund who located and assisted in the purchase of the land which became the Disney World site. Sharon and Bill had two children Michelle and Brad. Sharon created an estate plan to leave her share of the Disney fortune to her two children from her marriage to Bill and one child from a previous relationship. She made her ex-husband as one of the four co-trustees of the childrens’ trusts. The trustees were to determine whether the three children were competent to receive the monetary distributions at ages 35, 40, and 45 and the yearly payments of income. The disbursements were approximately $20 million per child every five years.

To complicate everything, Sharon then died and her ex-husband remarried. Then in 2009 Michelle, Sharon and Bills’ daughter, suffered an aneurysm and her father began caring for her as the trustee of her trust. Family members sued in court to remove Bill claiming that he was trying to isolate her from family and friends and take over her estate. As time went on, the other co-trustees of Michelle’s trust also filed petitions in the probate court to remove Bill as a co-trustee. Eventually Bill agreed to resign as trustee in exchange for significant yearly payments.

The drama continues over the Disney fortune because Brad, the son of Sharon, is developmentally disabled and needs a conservator to manage his affairs. Michelle, his sister, does not believe that her father Bill and his new wife should be managing Brad’s estate. The huge attorneys fees are draining the estate.