San Diego Estate Planning Lawyer Blog

Published on: November 21, 2009

Types of Conservatorships in San Diego

There are 3 types of probate conservatorships that can be obtained in the San Diego Probate Court. The first is the general conservatorship of a person where the Probate Court gives a responsible person (the conservator) the ability to take care of another person (the conservatee) or to manage someone’s financial affairs. With a conservatorship of the person, the conservator takes care of the conservatee’s health care, housing, food, clothing, and other personal needs. A conservatorship of the estate pays the conservatee’s bills, taxes, asssets and manages other aspects of finances.

A limited conservatorship is one that is set up for a developmentally disabled adult. If an adult with developmental disabilities is unable to care for himself or herself or their property in certain ways but not to the extent of needing a regular conservatorship, a limited conservatorship may be appropriate. The difference between a limited conservatorship and a general conservatorship is that a limited conservatorship is only available to adults with developmental disabilities. This could be something like autism, a brain injury at birth such as cerebral palsy or mental retardation, or other disability that arose before the age of 18, which is expected to continue indefinitely and constitutes a substantial handicap. The handicap could be in the area of self-care, receptive and expressive language, learning, mobility, self-direction, capacity to live independently, or economic self-sufficiency. Some of the powers that can be granted to the limited conservator are the power to decide living arrangements, the power to a sign a contract, and the power to make decisions about education or health care.

A third type of conservatorship is one under the Lanterman-Petris-Short Act for persons who are gravely disabled. “Gravely disabled”means a person, who as a result of a mental disorder or chronic addiction is unable to provide for their personal needs for food, clothing, or shelter. Usually this type of conservatorship is necessary for an individual who is seriously mentally ill or needs specialized care.

Published on: November 17, 2009

Executors, Administrators, and Trustees Accountable to Beneficiaries

by Scott C. Soady

In addition to handling probate, trust administration, and preparation of all types of trusts, we often get inquiries from heirs and beneficiaries with concerns about the way an executor, administrator, or trustee is administering an estate in San Diego. Sometimes beneficiaries cannot get an accounting of the trust assets. Sometimes they have issues with the distribution of assets. In some cases, they may have suspicions that the individual handling the estate is self-dealing or guilty of outright fraud.

The executor, administrator or trustee of an estate has a fiduciary duty to the beneficiaries. This means that they must act with the highest degree of honesty and integrity. They have certain duties under the law that they must fulfill. Among those duties are the duty to collect and protect the assets; duty not to commingle estate assets; and a duty to be impartial. They also are required to communicate with the beneficiaries, provide an accounting of the assets, and distribute the assets according to the testamentary instrument (will or trust) or if there is none, according to the Probate Code.

Law Office of Scott C. Soady, A Professional Corporation represents heirs and beneficiaries as well as executors, administrators, and trustees. If you can concerned about the way an estate is being handled, you have options and remedies. One remedy could be filing a petition in the Probate Court to have the Court address the issue, order an accounting, or remove an executor, trustee, or beneficiary. There are also civil remedies for fraud, breach of fiduciary duty, or constructive trust. If you are over 65 years if age, you may have a action for elder abuse.

Published on: November 12, 2009

The Poor Economy May Be Reason to Amend Your Estate Plan

by Scott C. Soady

With the recent downturn in the economy, San Diego has been one of the hardest hit with declining property values and unemployment. According to the Feds, the states in a full recession are California, Florida, Arizona, and Nevada. California has reached 11%unemployment and San Diego is in the top five cities for decline in property values. Because of these factors, San Diegans may need to review their estate plan and possibly amend their will or trust.

Suppose your trust leaves a cash bequest to a particular beneficiary, maybe a charity, and then divides the rest of your estate into percentages. When the value of your assets goes down, because of lower real property values or a decline in your investments, that in turn will affect the amount other beneficiaries receive as a percentages. As an example suppose an individual decided to leave $100,000 to his favorite charity and the rest of his estate is to be divided between his four children. The trust was done at a time when the rest of his estate had a value of $1 million. With the problems in the economy, now the estate is only worth $700,000. Instead of each child receiving 1/4 of $1 million, they will be receiving 1/4 of $600,000. Since the cash bequest to the charity comes out of estate before the rest of the estate is divided, the children are now going to have a $100,000 per child reduction. Instead of each child inheriting $250,000, they will only inherit $150,000. The trustor may want to rethink the amount of the cash bequest to charity and amend his trust accordingly.

Another example is where you leave one child your trust assets and other children non-trust assets such as an insurance policy. The amount of the life insurance proceeds are not going to change because of the economy but the trust assets very well may. If your goal is to treat all your children equally, then maybe your trust should be amended.

Published on: November 8, 2009

Can You Disinherit Your Spouse?

by Scott C. Soady

Previous posts have discussed how to disinherit your heirs such as a child, sibling, or parent. But what if you want to disinherit your spouse?

Some people may want to disinherit their spouse because they have already provided for him or her elsewhere in their estate plan. Another reason for disinheriting a spouse may be because the spouse has his or her own assets. As an example, suppose a couple marry later in life and each have children from a previous marriage. Neither needs the assets of the other and want to simply provide for their own children. How best to accomplish that?

The best way to disinherit a spouse is by a prenuptial or postnuptial agreement. If spouses sign a waiver and agree to receive nothing or less than the law allows, there is no problem.

Published on: November 3, 2009

An Heir is An Heir

by Scott C. Soady

When you die without a will or a trust, you are said to have died “intestate.” The Court in the probate proceeding ,which will have to occur when someone dies”intestate,'” will determine who receives your estate based on California law. So if, for example, you are single with no children, your parents are your heirs and your estate will be divided between your mother and father.

But what about a situation where a father abandons his child at birth, has had no contact with his child, never paid child support, i.e. not really much of a father. Should that type of father inherit his son’s estate when the son dies? You are probably hoping the answer is “no”. Unfortunately the answer is that the father will inherit from the son, no matter what kind of a father he has been.

In a California case called Estate of Shellenbarger, decided by the Second District Court of Appeal in 2008, there were similar facts. The son died intestate (without a will or trust). Since the son was unmarried with no children, his parents are his heirs under California law. The administrator appointed by the Court tried to argue that the father should not receive any inheritance based on fairness, because he had left the mother prior to his son’s birth and never made any child support payments. The Court ruled that intestate succession is purely based on statute and a Court cannot disinherit an heir even on equitable grounds.

Published on: October 31, 2009

Appraisal Method to Change?

by Scott C. Soady

In trust administration and probate in San Diego County, appraisals of the decedent’s real property are an important part of settling an estate. At Law Office of Scott C. Soady, A Professional Corporation, one of the first tasks is to obtain an appraisal of real property as of the date of death. The appraisal, in addition to valuations of the rest of the decedent’s estate, form the basis for determining the total value of the estate for purposes of distribution to beneficiaries.

Recently, a bipartisan amendment approved in October by the House Financial Services Committee proposes a new set of rules for obtaining appraisals. The old rules imposed nationwide by mortgage giants Fannie Mae and Freddie Mac, according to realtors and mortgage brokers, produced appraisals often below the agreed-upon price, causing delays and disputes and the necessity for multiple appraisals. The new rules are more likely to encourage independent appraisals, not influenced by loan officers and mortgage brokers. The new amendment has the endorsement of President Obama and the House of Representatives but may face an uphill battle in the Senate.

Appraisals are just one part of trust administration and probate. We use independent appraisers for real property and can help with appraisals of valuable personal property as well. There are numerous tasks that must be done by a successor trustee of a trust or an executor or administrator of a probate estate. Our estate planning lawyers at Law Office of Scott C. Soady, A Professional Corporation can assist you with all aspects of trust administration or probate. Please call or email with questions or to set a complimentary consultation.

Published on: October 28, 2009

Estate Issues Litigated in J.R.R.Tolkien Estate 26 Years after Death

by Scott C. Soady

In the Estate Planning area, we frequently see estates remaining open for years or litigation developing long after a person’s death. Do you remember “The Hobbit” written by J.R.R. Tolkien? For many of us baby boomers, it was a favorite story, one of the first “fantasy” novels which have become so popular. First published in 1937, it is now scheduled to be released in theaters as two prequels to the “Lord of the Rings.” The “Lord of the Rings” trilogy grossed about $2.9 billion world wide plus another $3 billion from DVD, TV licensing, and merchandise.

The movie based on The Hobbit was a long time coming because the movie studio who owned the rights to the story was sued by the heirs of J.R.R. Tolkien who died in 1973. Mr. Tolkien had sold the movie rights in 1969 for $250,000. The studio was to pay his heirs a percentage of the gross receipts after certain production and advertising expenses were deducted. The two children of Mr. Tolkien claimed that the accountancy methods used to apply this formula were improper so as to reduce the payments to them. Their initial demand in the lawsuit was in excess of $150 million, which increased as the case progressed because discovery, according to the estate’s lawyers, revealed additional impropriety.

The case was scheduled to go to trial in October and has apparently been settled. The settlement amount is confidential although some sources claim it is well over $100 million. The settlement paves the way for the movie studio New Line Cinema, a subsidiary of Warner Brothers, to move forward with the Hobbit movies.

Published on: October 24, 2009

Useful Links for Retirement Issues

by Scott C. Soady

In San Diego, there are many people wondering in this economy, when they can retire, when to take social security, how much they need to retire, etc. Social security has predicted that many Americans will live into their 90’s in the years to come and the cost of living will continue to increase so these aspects of retirement also have to be considered.

When to take social security? Although the normal age is 66 years, you can take benefits as early as 62, but your monthly benefit will be reduced. Social security has a table to determine how much it will be reduced. If you take social security early and still continue to work, your benefit will also be reduced for every dollar you earn over $14,160. See the SSA website for a chart on the amount of reduction.

If can be difficult to calculate how much you need to have saved to start retirement. Many people by delaying retirement just for a year or two can increase their annual retirement income by 9 or 10%. There are many on line sites where you can calculate how much you need for retirement. One is on Money Magazine. Another is offered by T. Rowe Price and there are many others. Make sure when you input information, consider that most peple will need at least 70% of their pre-retirement income after they retire. Be sure to add in all sources of income such as a part time job or a second career. Also figure in your projected social security benefits at retirement age.

Published on: October 21, 2009

Estate Planning for the Terminally Ill

by Scott C. Soady

For a person who is terminally ill, obviously time is of the essence. This urgency creates unique estate planning issues. Planning under these circumstances may involve not only the terminally ill individual but also an estate planning lawyer, CPA, financial advisor, and insurance agent. Family members may also need to become involved to assist the person in getting documents together, transporting the client, and assisting in other ways.

Here are some issues that need to be considered:

1. Does the terminally ill client still have mental competency? If the person has capacity at the present time but there is a risk that he or she may lose that capacity, then the planning needs to be done as soon as possible. Another thing to consider is having the individual execute a power of attorney that specifically includes the power to do estate planning so that an agent can make estate planning decisions for the terminally ill person.

Published on: October 17, 2009

Your “To Do” List

by Scott C. Soady

It’s hard for most people to plan for their death but one of the greatest gifts you can give your loved ones is to create an estate plan and with it a List of Guidelines for Location of Assets and Final Instructions.

In addition to your will and trust, you should prepare and keep current a list of your assets and a letter of instruction to provide the executor or trustee with important information to handle your estate and personal affairs in the most efficient manner. Copies should be distributed to your executor or trustee (if other than yourselves) and one copy should be in the binder that contains your will or trust.

The Location of Assets list should contain the following if applicable to you: