San Diego Estate Planning Lawyer Blog

Published on: March 31, 2010

The Importance of Family Dynamics in Estate Planning

When planning your trust, most people of course think about how they want their assets distributed, who will be their successor trustee, who will be the guardian of their minor children, and on what terms will their beneficiaries receive certain assets. What many people overlook is the family dynamics, ie. how will the decisions they have made in creating their estate plan affect their children and other family members? Will certain provisions in their trust cause discord leading to difficulties administering the trust and even litigation?

There are definite topics that seem to cause family disharmony. One is the choice of a successor trustee (the individual who will administer your trust after your death, pay the bills, and distribute the assets). Some clients name their oldest child. Others may make all 4 of their children co-trustees. Whatever you decide, it is important not to choice a trustee “because he or she is the oldest”, or “he knows more about finances” or “I will name them all so no one feels slighted”. You should consider the family dynamics of your family. Will naming them all make it difficult to make unanimous decisions? Sometimes clients will even choose a private professional fiduciary because they want to avoid the family conflict and sibling rivalry they fear may occur if they name a family member.

Another area that can be a big issue after death is the family home. You may want to leave the home to one child because they will not sell it. You may choose another child because they will sell it. When you make provisions in your trust for one child to buy out the others, you should be sure all the terms are spelled out so there is no dispute later. Whatever your choice, again think of the consequences. Disharmony among your children can result in arguments and litigation after your death which just increases the cost of trust administration.

Published on: March 28, 2010

But the Only Asset is a Home!

by Scott C. Soady

At Law Office of Scott C. Soady, A Professional Corporation, we often have people call us after reading our blog or website articles and ask such questions as “My father died but he didn’t have much, just a home. Do I have to file for probate?” or “My grandmother left me her condo in her will but it isn’t worth much? Do I still have to file for probate?”

The simple answer to these questions is probably “yes” in California. In other states where property values are lower, it may not be necessary but in California, if you are left real property and other assets valued at more than $100,000 and that property was not titled in the name of the deceased’s living trust, or in joint tenancy with you, you will have to open a probate.

There is a summary procedure in California to transfer property after death if the total value of the probate estate is less than $100,000. A Petition to Determine Succession to Real Property can be filed pursuant to Probate Code section 13100 if the estate is less than $100,000 and more than 40 days have elapsed since the death. It is a rare case however where real property in San Diego County is worth less than $100,000. You could have a situation though where the real property was in a trust or in joint tenancy, and the remaining value of the estate not in trust or joint tenancy was less than $100,000 in which case those assets could be transferrred to an individual pursuant to this type of petition.

Published on: March 24, 2010

Estate Planning for Digital Assets

by Scott C. Soady

Have you thought about what happens to your “digital assets” when you are gone? What happens to your email, your Facebook page, your blog, your website? What about online banking and investment accounts? What about all the photos you have stored on your computer and personal information that needs to be removed?

This can all be very challenging for a trustee or loved one to figure out upon your death. Most people plan for the distribution of their physical assets but may overlook digital assets. Also the person you choose to be your executor or successor trustee may not be sufficiently computer savy to deal with digital assets,

The American Bar Association has a website with an excellent article on how to incorporate digital assets into your estate plan. The author Dennis Kennedy has a great 5 step approach to managing such assets, including inventorying your assets, finding someone that has expertise with computers and digital assets, leaving instructions for what should happen upon your death, and giving such individuals the authority to do such things as closing you online accounts, taking down websties or blogs, and getting valuable data off your computer.

Published on: March 20, 2010

Changing Your Trust When You Move

by Scott C. Soady

Some clients ask whether they need to change their will or trust when they move into California from another state. Usually wills and trusts created in one state are valid in others as long as they were validly executed in the state where they were created. However there may be rules in the state you moved from that are different from the rules in California and this could effect your estate planning, especially in the area of marital property ownership. Here are some examples that may cause you to consdier having your trust reviewed once you have moved to California.

1. If you are married and moving into California, property you acquired in another state during your marriage may become ‘quasi-community” property so that now it is owed by both spouses.

This may necessitate amending some of the provisions in your living trust to be sure your trust document relects your wishes as to distributions of real property.

Published on: March 17, 2010

Handling a California Probate Yoursef

by Scott C. Soady

Probate is the process of transferring title to assets upon the death of an individual who dies with a will or without a will or trust. The person who has to begin the probate and follow through is the person named in your will as executor or someone the court appoints if you died without a will, called your administrator.

Many states have streamlined the probate processes however California probate has not and it can be confusing for the layman. Probate is initiated by filing a petition in the Probate Court to have yourself appointed to manage the estate. In San Diego County, the petition will either be filed in the downtown probate court or in north county. Letters Testamentary are issued if you were named as the Executor of the will or Letters of Administration if you are asking to be appointed administrator of an estate where there was no will. Once the letters have been issued, the personal representative (executor or administrator) can begin to inventory the assets in the estate, pay creditors, have the assets appraised, and ultimately transferred to a beneficiary or liquidated for distribution. The major difference between an estate with a will and an intestate estate (one without a will or a trust) is that where there is a will, the estate will be distributed in accordance with the provisions of the will. If there is no will, the estate will be distributed to the heirs at law of the decedent.

Depending on the decedent and the provisions of the will, there can be challenging issues that deveop such as a family allowance, probate homestead, and handling objections from family members. Look for a later post on these issues.

Published on: March 12, 2010

How Do You Know If You Need an Estate Plan?

by Scott C. Soady

Whether you need an estate plan depends in part of what stage of life you are in, your financial situation, and other factors unique to you. If you are young and just starting out with no home and few assets, a Durable Power of Attorney and an Advance Health Care Directive may be all you need. If you own a home, are married and have children, your situation changes drasticlly and you need to consider a trust. Here are some situations that make an estate plan something you need to consider:

1. You have minor children. If you have minor children, you need to think about who would care for them and manage the assets they inherit from you if you and your wife suddenly pass away. Who should be their guardian and how would you want the assets held and distributed to them as they grow up.

2. You have a disabled child or a disabled adult beneficiary. If you have a child or an adult beneficiary that is on public assistance, you need a special type of trust called a Special Needs Trust or Supplemental Needs Trust so that they can receive assets as an inheritance and not lose their eligibility for public assistance such as SSI and Medi-Cal.

Published on: March 8, 2010

Genetic Material is an Asset of Your Estate

by Scott C. Soady

With the advances in reproductive medical technology we are now seeing genetic material including sperm, eggs, stem cells, and even embryos being stored. Such genetic material is stored in a cryobank for later use, but what happens when the individual who stored the material dies? Is a child born posthumously entitled to inherit from its parent? The Courts have ruled that genetic material is property which like any other property can be bought, sold, or transferred so can you leave it to someone in your will?

The case of Brandalynn v Vernoff addressed the question of the rights of a child conceived with the sperm of a dead man. Sperm had been extracted from her father when he died in 1999 and were later used to perform an invitro fertilization on the widow which led to her birth. The courts ruled that the child, although born posthumously, had the rights to inherit from her father. There is a time limit in California. The sperm has to be used to create a child within 2 years from the death of the donor or the child will not have any entitlement to inheritance.

All of these issues should be addressed before you die. You can of course set up a sperm deposit while you are alive, however you should set out in an agreement with the cryobank what should be done with the sperm upon your death.

Published on: March 2, 2010

Obtaining a Deceased Person’s Credit Report

by Scott C. Soady

When a loved one dies, often family members need to obtain a credit report to find out what debts are outstanding, what accounts are still open and need to be closed, and to verify there has been no identity theft. Decedents are often targeted as victims of identity theft. Scam artists track the obituaries in the newspapers, steal death certificates, or obtain identity information on online. They open up new credit cards or run up charges on exisiting accounts. Identity thieves even steal information and sell it to another scam artist, sometimes across the country, to avoid detection. It can take months before a family of the decedent becomes aware of the fraud.

You can obtain a credit report on someone who has died by writing to the three big credit bureaus: Equifax, Experian, and Trans Union. Inform them of the death with the decedent’s full name, social security number, address, and date of death. Include a copy of the death certificate and your name and relation to the decedent. Ask for a current copy of the decedent’s credit report and that a notice such as “Deceased – Do not Issue Credit” be put in the file. You may also want to request that any suspicious activity be reported to you. Send the letter certified mail.

You can also print out a thorough form from the Identiy Theft Resource Center

Published on: February 24, 2010

What Does it Mean to be a “Fiduciary”?

by Scott C. Soady

In the estate planning world we used the term “fiduciary” a lot. Trustees, administrators, executors, and agents under a power of attorney are all “fiduciaries”. What does that term mean?

A fiduciary is an individual who undertakes to act for and on behalf of another in a particular matter. A fiduciary has to perform his duties with the utmost of trust and honesty. A fiduciary is expected to be loyal to the person to whom he owes the duty (the “principal”). He must not put his personal interests before the principal and must not profit from his position as a fiduciary unless the principal consents.

The most common circumstances where a fiduciary is involved in estate planning is when a trustee administers a trust. The trustee is a fiduciary who must administer the trust estate for the benefit of the beneficiaries. If an individual dies with a will, the executor of the will is the fiduciary who administers the will and distributes the estate to the beneficiaries. An estate administered for someone without a will is called an administrator, also a fiduciary. All of these individuals have the duty to act with the utmost of loyalty and impartiality.

Published on: February 18, 2010

Communication Can Help with Unequal Distributions

by Scott C. Soady

Adult children typically believe that their parents will leave all their assets to them equally however it is not unusal in our estate planning business to see clients who want to give unequal distributions to their children, leave gifts to friends or a favorite charity – even disinherit a child. Unequal distributions may be because they have already helped to support or educate one of their children or feel that one of their children has a spendthrift issue, or a variety of other reasons. We also see instances when a parent has remarried and wants to leave assets to his or her current spouse and is afraid that the children will not understand. Some people think a failure to be provided for in their parent’s will or trust is a sign of an absence of love.

According to an article in the New York Times talking to your children about your plans before you die can significantly lessen the chance that they will challenge your estate plan after you die. The kids may get angry at the situation but their anger will be directed at you, not at the favored beneficiaries after your death. The article quotes Gerald Le Van, a wealth mediator, who says that the children and grandchildren may not like what you have chosen to do, but at least they can feel like they were informed and hopefully will respect your wishes.Communication can also help relieve the tension between the adult children of a first marriage and the children and/or spouse of the second marriage.

One of the richest men in the nation, Warren Buffet, has provided education for his children and grandchildren but intends to leave his vast estate to charity. His family is well aware of his estate plan.