TRUST ADMINISTRATION

Published on: December 19, 2016

What Happens to My Credit Cards After I Die?

There are a number of small questions you might have about to estate planning. For instance, what happens to your credit cards after you die? Does your estate have to pay the bill? Or can the credit card issuer go after your wife or children to collect the unpaid balance?

Credit Card Issuers Must Prove Debt

Death does not automatically terminate a credit card agreement. If the account was solely in the deceased person’s name, the credit card issuer may file a claim for the unpaid balance with the estate. If the account was jointly held with a spouse or another individual, that person may still be liable for the debt. Otherwise, a credit card company cannot pursue relatives for the debt.

Published on: December 17, 2016

The Importance of the Trustee-Beneficiary Relationship

by Scott C. Soady

When you set up any kind of trust, it is important to consider the potential relationship between the trustee and any beneficiaries. In a revocable living trust, for example, the person making the trust often serves as the initial trustee. But when that person dies, a successor trustee must assume responsibility for the trust and make distributions to the beneficiaries according to the trustmaker’s instructions. Obviously, this process will go a lot smoother if there is a good relationship between the trustee and the beneficiary.

Trustee Ends Up Paying for Dealing With “Demanding” Beneficiary

Here is an example, taken from a recent unpublished California appeals court decision, of what can go wrong when there is a poor relationship between trustee and beneficiary. This case actually involves an irrevocable trust–one where the trustmaker does not serve as initial trustee and cannot amend or revoke the trust once it is made. Such trusts are commonly used for tax planning and charitable giving purposes.

Published on: December 16, 2016

How Do I Leave My House to Multiple Children?

by Scott C. Soady

If you have multiple children, it is a natural desire to provide for them equally in your estate plan. For some types of assets this is no big deal. You can easily divide a bank account into equal shares. But other types of property, such as real estate, can prove trickier to deal with. In many cases it may not be practical for multiple children to jointly inherit a parent’s home.

Son’s “Obstruction” Delays Sale of Property

A recent case from Santa Clara offers a helpful illustration. Here, a father of three adult children owned a 2.9-acre piece of land including a residence. The property was held in a revocable living trust. When the father died, his two daughters took over the trust as successor co-trustees.

Published on: November 26, 2016

Do I Have to Pay Taxes After I Die?

by Scott C. Soady

There are many questions you may have when thinking about estate planning. In addition to worrying about making a will, or setting up a trust, and dealing with decisions about whom to leave your property, there are also more mundane issues to consider. For example, do you still have to file tax returns after your death?

It probably will not come as a surprise that the answer is “yes.” Tax obligations do not end at death. In fact, death raises a number of tax issues that your surviving spouse (if you are married) or the executor of your estate will need to handle.

Personal Income Taxes

Published on: November 23, 2016

Can My Spouse Contest My Will?

by Scott C. Soady

It is not uncommon for a person entering a second marriage to keep certain assets as separate property for the benefit of any children from the first marriage. If you are in this situation, it is important to make sure that your estate planning reflects your intentions so as to avoid any potential misunderstanding with your current spouse. You have every right to leave separate property to your children without interference from your spouse.

Court Rejects Wife’s Estate’s Effort to Claim Husband’s Estate

Unfortunately, there are some cases where a person may still and try and challenge a deceased spouse’s estate plan. A California appeals court recently issued a series of three decisions in a long-running Orange County probate dispute involving the children of now-deceased spouses.

Published on: October 28, 2016

Does a “No Contest” Clause Prevent Someone From Claiming a Trust is Actually Valid?

by Scott C. Soady

Many wills and trusts contain a “no-contest” clause designed to discourage unnecessary litigation among family members after a person’s death. Basically, a no-contest clause disinherits anyone who files a lawsuit subsequently challenging the validity of the will or trust in court. But a recent San Diego case offered an unique spin on this legal principle: What happens when someone files a lawsuit claiming a trust is valid, notwithstanding the contrary claims of the trustee?

Court Revives Son’s Claim Against Mother Over Grandmother’s Trust

The litigants in this case are a mother and son. The dispute is over the terms of a revocable living trust established by the mother’s mother (i.e., the son’s grandmother). The grandmother originally created the trust in 1990. She purportedly signed two amendments to the trust, the first in 1999 and the second in 2013, several months before her death.

Published on: October 21, 2016

How One Word Can Affect Your Estate Plan

by Scott C. Soady

In estate planning a single word can make all the difference. Your will or trust is designed to express your wishes regarding your property. In the event of a legal dispute, a judge will attempt to strictly enforce the terms of your estate planning documents as written.

Court Rules “Trustee” Means Husband and Wife Acting Together

Here is a recent example of how one word can change the meaning of a trust. This is a case from Alameda County and is not considered binding precedent in the rest of California, but it still offers a useful illustration of how courts interpret an estate planning document.

Published on: October 16, 2016

What Happens if My Trustee Does Not Carry Out My Wishes?

by Scott C. Soady

A revocable living trust is a document appointing a trustee to assume custody of certain assets that you designate. You can serve as your own trustee during your lifetime. Upon your death, the successor trustee you name is then required to manage or dispose of the trust property as specified in the trust instrument.

San Diego Zoo Seeks Removal of Ineffective Trustee

Unfortunately, there are cases in which a trustee may fail to carry out the trust settlor’s instructions in a timely fashion. This, in turn, can lead to extended litigation. A recent case from here in San Diego presented such a scenario. This case is only an illustration and should not be construed as a complete statement of California law.

Published on: September 12, 2016

How Much Discretion Does My Successor Trustee Have?

by Scott C. Soady

A revocable living trust allows you to maintain control over your property during your lifetime. Although you transfer the title of your property to a trustee, that trustee can be you, and more importantly, you are free to add or remove property from the trust as you see fit. Upon your death, however, the terms of your trust generally become irrevocable, and your successor trustee is bound by any instructions that have you left.

Trustee Not Permitted to Extend “Option Agreement” After Settlor’s Death

California courts will strictly construe the terms of your revocable living trust in an attempt to carry out your stated wishes. This means that a successor trustee’s discretion may be limited depending on how the trust is worded. A recent California appeals court decision offers a helpful illustration.

Published on: July 29, 2016

When Should I Specify Conditions on Distributing Income From a Trust?

by Scott C. Soady

A revocable living trust is a useful estate planning tool when you want to make provisions for your family members beyond your death. A trust need not distribute all of its assets upon your death. You may instruct your trustee to retain the trust principal and distribute only the income at periodic intervals to your designated beneficiaries. This can ensure your beneficiaries receive a steady stream of income for many years.

Ex-Wife Continues to Collect From Late Father-in-Law’s Trust

It is important to be as specific as possible when spelling out the conditions for any income distributions under a revocable living trust. A recent California probate case offers a useful cautionary example. In this case, a man created a revocable living trust in 1977 just before he died. The trust became irrevocable on his death and remains in force today.