San Diego Estate Planning Lawyer Blog

Published on: June 15, 2010

Don’t Forget to Fund Your Trust

Once your revocable living trust has been created, you need to “fund” the trust with your assets. A trust that is not funded is useless as a vehicle to avoid probate. If you have gone to the time and expense of preparing a trust, you certainly don’t want your heirs to have to go through probate so it is very important that you “fund” your trust.

“Funding” your trust means that you transfer ownership of your assets into the name of your trust. In the case of real property, this means executing a new deed transferring the property from your name as an individual to your name as the trustee of your trust.

In the case of bank accounts, brokerage accounts, stocks, and bonds, you need to show the institution that your trust exists and you want the accounts to be in the name of your trust. Your estate planning attorney should have included a Certificate of Trust in your revocable living trust package, which is a simplified document showing the existence of the trust, the powers of the trustee, and other information about your trust without revealing the dispositive provisions.

Published on: June 11, 2010

Actor Gary Coleman’s Estate Will be Disputed

by Scott C. Soady

Celebrities are always providing estate planning lessons for the rest of us. Gary Coleman who died in Utah in May at age 42 is the latest celebrity whose estate planning was a disaster. There are at least 3 wills, maybe more, that have been found and the fight has already begun between his ex-wife Shannon Price, his estranged parents, and a woman who formerly lived with the actor and was the CEO of his corporation, Anna Gray.

Supposedly there is a will executed in 1999 leaving everything to his manager Dion Mial, a will executed in 2005 leaving everything to Anna Gray ,and a document purporting to be an addendum to a will executed in 2007, one week after he and Shannon Price were married, leaving everything to Price. The document is not witness or notarized. Price and Coleman divorced in 2008 although according to Price, continued to live together in a common law marriage. (Utah is one of a dozen states that recognize common law marriage.)

Friend and co-star Todd Bridges also has said he has a secret will expressing Coleman’s true wishes about his estate and his final wishes. The actor’s estranged parents also claim that since Coleman and Price were divorced, they have the legal rights to his remains. The court in Utah has already scheduled a hearing for July 2 to sort things out and appoint a personal representative of the estate.

Published on: June 7, 2010

Standards for Heath, Education, Support, & Maintenance

by Scott C. Soady

Often trusts provide for the distribution of assets at different intervals. This is a common occurrence where parents want to provide for their children during their minority and then spread out the distributions during adulthood. A typical trust might leave a certain percentage to a beneficiary at age 21, 25, and 30. Other parents may want to provide for distributions at age 25, 30, and the remainder at 35. In the years between the distributions the trustee has the discretion to make distributions for “health, education, support, and maintenance.”

The IRS in Section 2041of the Internal Revenue Code sets out ascertainable standards for “health, education, support, and maintenance.” The Treasury Regulations provide some assistance in knowing what these terms mean. “Health” for example includes “medical, dental, hospital, and nursing expenses” as well as “health maintenance and comfort.” The trustee can probably make distributions that are not strictly medical in nature, maybe food supplements or a item of comfort.

“Education” is more narrowly defined to include college and professional education. Thus if the Trustor wants to expand on that definition to include such things as trade school, art school, travel expenses to and from school, etc., those items should be specifically set out in the trust.

Published on: June 3, 2010

Probate Estate, Non-Probate Estate, Gross Estate, & Net Estate

by Scott C. Soady

You hear the term “estate” used alot in the context of estate planning but there are many variations: gross estate, net estate, probate estate, non-probate estate, trust estate. How do all these terms differ?

The value of your estate at the time of death is called your “gross estate”. This includes cash, bonds, stocks, real property, IRAs, pension benefits, life insurance, other investments, personal property, business interests, and any other assets owned. It is without consideration of debt that may be owned or taxes that need to be paid. It is your gross estate that determines whether there will be any estate tax that has to be paid. 2010 is an interesting year however because during this year, there is no federal estate tax whatsoever, regardless of the value of your estate. Unless Congress acts before 2011 to change it, the estate tax is set to return to a level of $1 million in 2011. This means that estates valued in excess of $1 million will be subject to estate tax.

“Net estate” is the value of your estate once all the expenses have been deducted such as funeral expenses, trust or probate administration expenses, taxes, and debts. It is the “net estate” that is distributed to your heirs or beneficiaries.

Published on: May 31, 2010

Have You Ever Heard of an Ethical Will?

by Scott C. Soady

At Scott C. Soady, A Professional Corporation, we encourage families or individuals to create an estate plan, consisting of a will or a revocable living trust so your loved ones know how you want your assets distributed. An interesting off shoot from traditional estate planning is an ethical will. Have you ever heard of one?

An ethical will (also called a “legacy letter”) is a document designed to pass ethical values or life lessons from one generation to the next. They have been around for centuries and come from the Judeo-Christian tradition. Rabbis and Jewish laypeople wrote ethical wills during the 19th and 20th centuries.

Today, Dr. Andrew Weil, a noted author and doctor of integrative medicine who has written books on health and aging, promotes ethical wills as a gift of spiritual health to your family. Leaving such a document explains to your loved ones their family and cultural background, ethical and spiritual values, life lessons and experiences, and your hopes for future generations.They are becoming more prevalent. Even President Obama has written a legacy letter to his daughters.

Published on: May 27, 2010

How Can a Trustee Resign?

by Scott C. Soady

A trustee is the person who handles the distributions to the beneficiaries according to the terms of the trust document. Some trusts can go on for years if there are distributions to be made for the benefit of minors or for other reasons. There may be some circumstances where a trustee may wish to resign from his duties as a trustee of a trust before the trust is completely administered. There are basically 4 ways.

1. As Provided in the Instrument. Most trusts by their express provisions allow a current trustee to resign with written notice and an accounting. For example, suppose you are the successor trustee of your parent’s trust and find that you must take a job abroad. If the trust names an alternate successor trustee and specifies that a currently serving trustee may resign by giving written notice to the beneficiaries, it is easy for you to resign. Some trusts also provide that when trustees resign, the resigning trustee must account for the transactions and dispursements he made while acting as Trustee.

2. With a Revocable Living Trust With the Consent of the Trustor. Suppose you are the Co-Trustee of your father’s trust and you want to resign. If your father consents, you can resign and your father can appoint another Co-Trustee if he wishes. It is a good idea to put the consent and resignation in writing. There is no requirement that you give notice to the beneficiaries.

Published on: May 23, 2010

What is a Limited Conservatorship?

by Scott C. Soady

There are several types of conservatorships, one of which is a limited conservatorship. These types of conservatorships are set up for an individual who is developmentally disabled and unable to provide for his or her personal needs and/or financial affairs. Developmental disabilities include such conditions as autism, cerebral palsy, and mental retardation that was diagnosed before the individual’s 18th birthday.

Many disabled people can do certain things on their own and do not need a regular conservatorship. With a limited conservatorship, the Court has the authority to give the conservator some or all of the following limited powers: determining where the conservatee will live, giving or withholding of medical treatment, determining the ability of the conservatee to contract, controlling social and sexual relationships, giving or withholding of consent to marry, and making decisions about education. The limited conservator also can be granted the authority to see the conservatee’s private papers and records and manage their finances.

Limited conservators are usually the parents or siblings of the conservatee but the Court can appoint other interested persons who petition the Court. Once a conservator is appointed, he or she will take care of the conservatee’s food, shelter, clothing, and medical treatment and if appointed conservator of the estate of the conservatee, will also manage that person’s assets, collect income, and pay the bills.

Published on: May 19, 2010

Considerations When Choosing a Guardian for Your Children

by Scott C. Soady

As you prepare your estate plan, many of the decisions you have to make relate to your children. You may not have thought about how you would want your estate distributed to your minor children if something should happen to you. Would it go to your children equally? Should it be distributed outright or in trust? Should your estate be held in trust with distributions for health, education, and support and then distributed at various age intervals? Who would be an appropriate choice to be the trustee that manages your children’s assets

Another consideration is the choice of who will be the guardian for your minor children. Here are some questions to ask yourself as you think about who to nominate as the guardian of the person, ie. the individual or couple who will physically take care of your children: feed them, clothe them, educate them, etc.

1. Is the person you’ve chosen young enough to take on the responsibility? Often young couples will want to name the maternal or paternal grandparents. Raising children is a tough job and as much as you may want to name your parents, they may not be physically capable of raising your children to adulthood or they may not survive you. If you do choose individuals who are older than you, always name back up guardians.

Published on: May 15, 2010

Is Hiring an Estate Planning Lawyer Worth It?

by Scott C. Soady

It is true that in todays society, you can prepare your own will or trust using the internet or a book on estate planning. The question is whether you should!

Kiplinger magazine has a quiz to test your knowledge of what makes money savings sense and what doesn’t. Such questions as whether it is cost effective to join a warehouse club, change your oil every 3000 miles, and invest in “load” mutual funds. Question 4 asks whether it is worth it to hire a lawyer to prepare your will or trust. The answer is “yes”. Kiplinger says it makes sense to pay a competent lawyer a reasonable fee to prepare a will or a trust. In the long run, it is cheaper than a costly legal battle later.

At Scott C. Soady, A Professional Corporation, we offer a complete revocable trust package for a reasonable flat fee. If you mention that you located our office through the internet, you also get a 25% discount. The documents you will receive with your trust package are a revocable living trust, pour over will,durable power of attorney for assets, advance health care directive, certificate of trust, assigments of personal property, and deeds recording your San Diego property. Our experiened estate planning lawyers will meet with you and advise you of the various types of trusts provisions that may be incorporated into your estate plan and help you make decisions on the choice of a trustee, guardian for your minor children, how to give to charities, and what assets to title in the name of your trust.

Published on: May 11, 2010

Is There a Will or a Trust? How Hard Should We Look?

by Scott C. Soady

When a person dies in San Diego, the Probate Court will determine to whom the assets of the decedent will be distributed based on the laws of “intestate” succession. “Intestate” means that the decedent died without a will or a trust. Before you decide to file a probate proceeding without a will, make sure that it is indeed the case that no will or trust can be found. It can make a difference.

Look for a will or a trust in the decedent’s home and business files, safety deposit box, or safe. Ask other family members if they recall the decedent mentioning that he or she executed a will or a trust. Find out if the decedent had a family lawyer who may have drafted an estate plan or referred the decedent to an estate planning lawyer. Often estate planning attorneys will keep the originals of clients’ estate plans in their fire proof safes. Look through the decedent’s collection of business cards to see if a lawyer is among them.

If no will or trust can be found, the steps in the probate process will be the same as for a probate with a will. The difference is in the distribution of the assets. A couple of examples will illustrate the difference: