San Diego Estate Planning Lawyer Blog

Published on: December 30, 2016

When is a California Conservatorship Necessary?

If you have a family member who is unable to care for him or herself, it may be necessary to seek a conservatorship for that person. A conservator is someone appointed by a probate court to manage the personal or financial affairs of another person (the conservatee). In California there are several different types of conservatorships. For example, a conservator of the estate exercises control over the conservatee’s assets and finances, while a conservator of the person makes decisions regarding the conervatee’s health care, living arrangements, and other basic needs.

Court Appoints Conservator Due to Spouse’s Irresponsibility

While California conservatorships are often associated with elderly relatives with dementia or physical disabilities, in truth a conservatee can be someone of any age and condition. For example, in a recent California case, a probate court created a conservatorship for a woman in her early 30s due, among other things, her ongoing substance abuse problems. Although the woman is married, the court named her aunt as conservator.

Published on: December 21, 2016

How Does a “Power of Appointment” Affect My Estate Plan?

by Scott C. Soady

In a revocable living trust, the person making the trust (the grantor) usually decides how the trust’s assets should be distributed after he or she dies. However, there may be circumstances where the grantor wants to give that power to someone else, usually one of the trust’s beneficiaries. This is known as a “power of appointment.”

Court Rules Son Improperly Used Father’s Power of Appointment

If the grantor places no restrictions on a power of appointment, it is considered a “general” power. This means the beneficiary can name anyone–including themselves or their creditors–as recipients of the trust property. A special power of appointment, in contrast, restricts the beneficiary’s discretion.

Published on: December 20, 2016

Is the Estate Tax Nearing Death?

by Scott C. Soady

The federal estate tax has long been a source of political controversy. The tax applies to the transfer of assets upon a person’s death, but there are a number of exemptions that effectively exclude all but a handful of estates from paying. No estate with a gross value of $5.45 million ($5.49 million as of January 1, 2017) is liable for the tax. Additionally, one spouse can leave an unlimited amount of property to the surviving spouse without owing any tax. While some states still impose their own estate tax, California does not.

Trump Expected to Undo Obama Rules Changes

In August, the U.S. Treasury Department proposed new regulations that it claimed would close “loopholes” in the estate tax. According to the White House, these regulations would make it more difficult for estates to restrict the use of certain assets in order to “discount” their value for tax purposes. Many business owners, in California and elsewhere, have spoken out against the proposed rules, arguing that they will raise their projected estate tax liability and force them to sell their businesses instead of leaving them to their children.

Published on: December 19, 2016

What Happens to My Credit Cards After I Die?

by Scott C. Soady

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 18, 2016

Designating Beneficiaries for Your Retirement Accounts

by Scott C. Soady

Most California residents have some form of retirement savings. These accounts usually do not pass as part of a person’s probate estate. Instead, the account holder is expected to name one or more beneficiaries who automatically receives any funds upon death.

Types of Retirement Accounts

There are several different kinds of retirement savings. The two most common are traditional individual retirement accounts (IRAs) and 401(k) plans. Both accounts offer tax benefits. Contributions to an IRA are tax-deductible while 401(k) contributions are made with “pre-tax” dollars. Tax is therefore deferred until the account holder makes withdrawals, which must begin by the age of 70 years and 6 months. The account holder must also pay a penalty if funds are withdrawn “early,” which is defined as before the person reaches the age of 59 years and 6 months.

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 25, 2016

Rise in Alzheimer’s, Dementia Deaths Emphasize Importance of Estate Planning

by Scott C. Soady

The London Telegraph recently reported that there has been a “huge rise in the number of lasting powers of attorney” filed with the government. The Telegraph said more than 441,000 powers of attorney were established in 2015, nearly 12 times as many as were filed in 2008, when the British government amended the laws governing powers of attorney in England and Wales.

The Telegraph noted the correlation between the increased filings of powers of attorney and new figures from the UK’s National Health Service indicating dementia and Alzheimer’s disease had become the leading cause of death in England and Wales, overtaking heart disease. The powers of attorney figures cited above were obtained by a pension company that told the Telegraph many British citizens were still at risk for losing control over their finances due to a lack of a legally executed power of attorney.

In the United States, Alzheimer’s is currently considered the sixth leading cause of death. According to the Alzheimer’s Association, more than 5 million American citizens suffer from the disease. One out of every nine people over the age of 65 will develop Alzheimer’s, and 1 out of every three seniors will die with Alzheimer’s or some other form of dementia.

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.