San Diego Estate Planning Lawyer Blog

Published on: June 18, 2016

Does My Estate Have to Pay Taxes After I Die?

An often overlooked aspect of estate planning is taxes. After all, death does not extinguish any tax debt that you may owe to the Internal Revenue Service or the State of California. It is possible your estate will owe tax for income earned on your assets even after your death.

Federal Government Collects on Unpaid Estate Tax Bill

For example, the estate of some wealthy Californians may be liable for the federal estate tax. The estate tax is technically a “tax on your right to transfer property at your death.” But most estates will never owe this tax because the law contains a sizable exemption before tax is assessed. For individuals who die in 2016, the exemption is $5.45 million. There is also an unlimited “marital deduction” for transfers from a deceased spouse to a surviving spouse.

Published on: June 17, 2016

What Happens to My Child Support Obligations if I Die?

by Scott C. Soady

One of the most important reasons to make an estate plan is to provide for your family after you are gone, but family can be a legally complicated concept. For instance, if you voluntarily make child support payments for a minor who does not live with you, do those payments automatically end upon your death? Alternatively, can an ex-spouse enforce a child support order contained in a divorce decree against your estate?

Child Support Can Be Enforced as a Creditor’s Claim

A recent New Jersey case illustrates how these questions can play out in court. The case involves the estate of a New Jersey man who had a son with a woman who lives in New York. In 2008, the parents entered into a voluntary child support agreement whereby the father agreed to pay the mother $3,000 per month in child support until the son reached the age of 21. The father also agreed to separately pay the child’s medical and educational expenses. A New York State court subsequently entered a child support order based on the parents’ agreement.

Published on: June 8, 2016

How Creditor Claims Can Affect Your Estate

by Scott C. Soady

Estate planning is not just about taking care of your family. It is also about taking care of your creditors. Your death does not magically make your debts disappear. The personal representative of your estate has a legal obligation to pay your valid debts from the assets in your probate estate before distributing the remainder to your heirs or the beneficiaries named in your will.

Death of NBA Team Co-Owner Raises Creditor Concerns Over Potential Sale

Creditor claims can significantly complicate the administration of a probate estate. An ongoing high-profile probate case in Oklahoma offers a useful illustration. In March of this year, Aubrey McLendon, a well-known natural gas company executive, died in a single-car crash. Among his many assets, McLendon owned approximately 20% of the NBA’s Oklahoma City Thunder franchise. McLendon was part of a group that purchased and relocated the former Seattle Sonics to Oklahoma City in 2008.

Published on: June 7, 2016

What Happens When a Family Member Compromises My Estate Plan?

by Scott C. Soady

Selecting a personal representative or executor for your estate is often the most important estate planning decision you will make. In most cases a spouse or family member is named as executor. But there may be situations in which you may wish to consider someone from outside the family, such as a professional fiduciary, to oversee the distribution of your assets after your death.

Daughter Ordered to Return Funds Illegally Diverted from Father’s Estate

For example, there may be times when you do not trust a family member to deal honestly and equitably with other family members. A recent case from here in California offers a useful illustration. This case involves an estate asset that was located nearly 20 years after the estate was opened. The deceased was a man with three children. He did not name any of the children as executor, but rather appointed an outside person to the role.

Published on: June 4, 2016

Can My Ex-Spouse Claim My Estate After I Die?

by Scott C. Soady

Divorce often alters a person’s estate planning priorities. After all, if you previously signed a will leaving your entire estate to your spouse, you probably want to reconsider that arrangement after your divorce becomes final. California law assumes that any gift you make to an ex-spouse under a pre-divorce will is revoked unless you expressly state otherwise. This assumes that the divorce itself becomes final before one of the spouses dies.

Court Fines Man $15,000 for Trying to Void Divorce After Ex-Wife’s Death

In a recent case, a California appeals court sanctioned a man who attempted to declare his earlier divorce void so that he could inherit from his deceased ex-wife’s estate. According to court records, the couple legally separated in 2009. In November 2010, following extended mediation, the parties filed a stipulated judgment—a divorce settlement—with a California Superior Court judge. A copy of the judgment signed by both spouses and stamped with the judge’s signature was then filed with the court clerk’s office.

Published on: June 3, 2016

Can I Limit the Scope of a Power of Attorney?

by Scott C. Soady

A power of attorney names someone to act as your agent. The agent may only take those actions expressly provided for in the power of attorney. For instance, you might sign a power of attorney authorizing your agent to sell your house. This does not mean the agent can also access your brokerage accounts or amend your will. You have the right to limit the powers that your agent may exercise on your behalf.

Marriage Alone Does Not Create a Power of Attorney

California courts are required to strictly apply the terms of a power of attorney. A recent case decided by a state appeals court in Santa Ana helps illustrate this point. This case sadly involves a man who died while under the care of a hospital. The widow sued the hospital for negligence and wrongful death. The hospital then moved to force the widow to submit her case to binding arbitration.

Published on: May 29, 2016

How and When to Create a Spendthrift Trust

by Scott C. Soady

Parents often want to leave an inheritance for their children. But what if your children are not the most financially responsible people? A trust can provide a flexible means for managing your money after your death so that a “wild child” won’t squander your life’s work.

It is common for a will or living trust to contain special provisions for children. Such a children’s trust leaves your estate to a trustee, who can then make distributions to your children for their health, education and maintenance, while reserving outright distributions until they reach a specified age, such as 21 or 25. But if your children are already adults at the time you are making an estate plan, you might consider a living trust with what is usually known as a “spendthrift” clause.

Basically, a spendthrift trust is where one person is named as beneficiary and another serves as the trustee. It is up to the trustee to make sure the beneficiary does not simply squander the principal assets in the trust. You can establish the spendthrift trust to give the trustee specific instructions and authority. For example, you might direct the trustee to give the beneficiary a fixed amount of income from the trust or each month. Or you might limit it further, saying the trustee will only make payments for the beneficiary’s rent or education. You may even allow the trustee to cut off the beneficiary entirely and redirect the trust’s principal to an alternate beneficiary.

Published on: May 28, 2016

Taxi Medallion Sale Highlights Importance of Making a Will

by Scott C. Soady

It is always a good idea to make a will. Although the law of intestacy provides for the distribution of your assets if you die without leaving a will, making a will (or trust) allows you to decide who should inherit from your estate. This can be especially important if you are married but have children from a prior marriage. In California, the law of community property can result in those children receiving little or nothing if you fail to leave a will.

Stewart-Williams v. Williams

Here is a recent example from a California Court of Appeal decision. This should not be construed as legal advice or a complete statement of California law on this subject. This is merely a case illustrating how the probate courts deal with community property of a deceased individual who does not have a will.

Published on: May 27, 2016

Can I Transfer Ownership of My Stocks Without a Will?

by Scott C. Soady

While real estate and cash are the first assets you might think about in connection with estate planning, you should not neglect your stock portfolio. According to a 2015 Gallup poll, approximately 55% of Americans have money invested in the stock market. The law in California and many other states offers a process for transferring your stock without having to go through a formal probate process.

What is a TOD Registration?

Although stock offerings are regulated by the federal government through the U.S. Securities and Exchange Commission, the actual registration of stock ownership is handled under state law. And just about every state has adopted the Uniform TOD Security Registration Act. The “TOD” stands for “transfer on death.”

Published on: May 26, 2016

Can a Probate Court Admit an Earlier Version of My Will?

by Scott C. Soady

Signing a last will and testament is often not a one-time affair. You may in fact execute several wills over the course of your lifetime. While a “last” will usually refers to the document signed most recently before your death, there are occasions when a California probate court may find good cause to admit an earlier will.

Judge Nullifies Will Favoring Stepdaughter Over Biological Children

For example, in a recent case from Los Angeles, a state appeals court upheld a probate judge’s decision to admit a decedent’s next-to-last will over his last will. The probate court found the last will was the product of undue influence but the previous will was not. The court therefore admitted that will to probate over the objections of the decedent’s children.