Estate Planning Practice Blog

U.S. Chamber Small Business Regional Finalists!

Tredway, Lumsdaine & Doyle, LLP has been awarded U.S. Chamber Small Business of the Year Award 2007 -- West Regional Finalists and the Blue Ribbon Small Business Award!

When you work with TLD, we take extreme pride in our ability to work well with our clients in handling their legal matters and estate planning and probate matters are no exception.

For our estate planning clients, the firm's estate planning and probate department is very strong and well-staffed with over 4 attorneys handling estate planning (two of which are partners) and over 7 attorneys handling related litigation matters in these practice areas.

Tredway, Lumsdaine & Doyle LLP -- From Good to Great.

4 Points for Advance Health Care Directives.

It is estimated that four out of five Americans do not have a written health care or end-of-life directive to help their families make decisions for them if they become incapacitated.

Health care and end-of-life advance planning, if done right, accomplishes four things:

1. Ensures that the person you want to speak for you has the legal authority to do;
2. Helps ensure that your wishes about your health care are known and respected;
3. Avoids unnecessary, intrusive, and costly medical treatment at the point you no longer want it; and
4. Reduces the suffering experienced by your loved ones, because they will have your guidance.

Having your Advance Health Care Directive in place is an essential part of a completed estate plan. You can prepare an Advance Health Care Directive as a stand-alone document as well and not part of an overall plan. Having things in place even in bits and pieces is almost better than nothing.

I Don't Know What To File This Under.

I got a call last week from a family in need of my services. The conversation went like this:

I think my family member has limited capacity. I need to do something.

How so? What makes you think that your family member has limited capacity?

He had a partial lobotomy not too long ago.

Oh, that would do it.

Don't you think that if you were going in for a partial lobotomy you'd get your estate planning and related affairs in order since your incapacity after the procedure might become an issue and cause problems for your family?

The lesson learned here: if you are undergoing a serious medical treatment or have been recently diagnosed with a life threatening illness, you should consider getting your affairs in order sooner than later. 

Trust Administration: When There is Real Property.

Last week I posted about the most important step in administering a Living Trust after a Settlor has passed away. I am going to start the last week of March about posting about the next step for trust administration where there are real property held in the Living Trust. This is part two of an occasional series on this important topic.

1. An Affidavit of Death of Trustee and Consent of Successor Trustee should be recorded against each real property held in the Living Trust. This Affidavit is recorded with a certified copy of the death certificate. When it is recorded, it changes the title of the property from the trustee (usually the settlor) who has died and into the names of the new trustee(s).

2. Along with this Affidavit, a Preliminary Change of Ownership Form must be completed and recorded at the same time.  This form essentially informs the county recorder why you are recording the Affidavit.

3. And if the Living Trust will transfer the ownership of the real property from parents to children or any other manner exempt from property tax reassessment then the appropriate exemption form should be filled out and mailed to the county assessor's office.

It's a little more complicated than just 1-2-3 as described above, but you get the general idea. The general idea that there's lot to do for trust administration. If you are currently administering a Living Trust, consider hiring an estate planning attorney to assist you through this process.

Intestate Will By The State.

If you die without a Will or a Trust, here's a great tongue-in-cheek example of what the Will that many states will draw up for you in your stead:

[Remember, this is tongue-in-cheek and not a valid Will by any means. Don't copy anything!]

INTESTATE WILL OF  Amy Doe

(Drawn up for Her by the State)

I, AMY DOE, of _______________________________, declare this to be my will.

One

1.1    I give to my husband only one-third (1/3) of my possessions, and I give to my children the remaining two thirds (2/3) equally.

1.2    I appoint my husband as guardian of the property of my minor children, but as a safeguard I require that he report to the Probate Court each year and render an accounting of how, why and where he spent the money necessary for the proper care of my children.

1.3    As a further safeguard, I direct my husband to produce to the Probate Court a Performance Bond to guarantee that he exercises proper judgment in the handling, investing and spending of the children's money.

1.4    As a final safeguard, my children shall have the right to demand and receive a complete accounting from their father of all of his financial actions with their money as soon as they reach legal age.

1.5    When my daughter reaches age eighteen (18), she shall have full rights to withdraw and spend her share of my estate. My son shall have this right as soon as he reaches age eighteen (18). No one shall have any right to question my children's actions on how they decide to spend their respective shares, after they are received.

Two

2.1    Should my husband remarry and then die intestate, his second wife shall be entitled to one-third (1/3) of everything my former husband owns.

2.2    Should my children need some of this share for their support, the second wife shall not be bound to spend any part of this share on my children's behalf. The second wife shall have the sole right to decide who is to get her share, even to the exclusion of my children.

Three

3.1    Should my husband predecease me or die while any of my children are minors, I do not wish to exercise my right to nominate the guardian of the person and/or of the property of my children.  Rather than nominating a guardian of my preference, I direct my relatives to get together and select a guardian by mutual agreement.

3.2    If my relatives fail to agree on a guardian, I direct the Probate Court to make the selection.  If the court wishes, it may appoint a stranger acceptable to it who will be entitled to compensation for handling my children's property.

Four

4.1    Under the existing tax laws, there are certain legitimate avenues open to me to lower death taxes.  Since I prefer to have my money used for governmental purposes rather than for the benefit of my husband and children, I have made no effort to lower death taxes.

Five

5.1    I am leaving it to the discretion of the Probate Court to appoint my
husband my personal representative.  Since I do not care about saving money for my family:

5.1.1    I know that my husband as Personal Representative may have to have, and that my estate may have to pay, a premium on my husband's Performance Bond as Personal Representative;

5.1.2    I know that my Personal Representative will have to obtain court approval for all sales of estate assets which will increase attorney's fees and court costs.

5.2    Since I am allowing the State to write my will for me, I accept all changes in the law affecting my estate which are made by statute and court decision at any time prior to my death.

5.3    I hereby forego the opportunity to state a presumption regarding my death in case my spouse and I die simultaneously, preferring the Uniform Simultaneous Death Act to apply.

5.4    I hereby forego the opportunity to require a beneficiary hereunder to survive me for a certain length of time so that if a beneficiary dies shortly after me, there will be a probate both at my death and at the beneficiary's death.  I do this partly because I know there are a lot of lawyers today and I want to create probate work for them, and partly because I want the state and federal governments to be able to get twice as much in death taxes in a short period of item.

Made by the State for me on this, the date of my death __________________.

________________________
Amy Doe
(No Signature Required)

NEW SEMINAR! Estate Administration Procedures

Monica Goel is a featured speaker at the upcoming National Business Institute seminar on June 14, 2007, in Irvine.  For information about Monica's seminar, click here.

She will be speaking throughout the full day on Estate Administration Procedures: Why Each Step is Important.

Anyone can register and attend this seminar through the National Business Institute. If you hold a professional designation or license, you may be able to receive continuing education credits for attending.

Trust Administration: The First And Most Important Step.

Trust administration is a necessary process that occurs after the death of either one or both settlors. There are many things that must be done to ensure proper administration. Many of these steps are designed to protect the successor trustees. This is part one of an occasional series on this important topic.

Trust administration begins with a required probate code notice to all trust beneficiaries and heirs of the settlors.

California probate code section 16061.7 states that such notice must be sent within 60 days of the death of a settlor and allow the recipient of the notice to request a copy of the trust. After receiving the mailed notice, the recipient has 120 days from the date of mailing to file a trust contest. If no contest is filed within a 120 days then the notice recipient may forfeit their right to file a contest.

But if no notice is mailed the statute of limitations in which a trust contest could be filed is much greater, and could be up to at least four years.

Beware: many successor trustees who handle trust administration without the advice of an attorney often skip this very important step.

Working with an attorney for trust administration is a rather straightforward process and will give the successor trustees a great peace of mind throughout the administration.

Transfer Your Assets Into Your Living Trust!

Today I reviewed two, no, make that three, estate plans involving Living Trusts where the major asset, the real estate, was not in the Living Trust.

If you did not execute and record a deed (grant deed, quitclaim deed or trust transfer deed) transferring your real estate to your Living Trust -- it is not in there. If your real estate is not in there, your Living Trust is pointless, useless and worth less than a sack of potatoes.

The first couple had a Living Trust and owned two properties. One property was in the trust, but not the other. The second property would be subject to probate and will be transferred to the living trust via a pour-over Will. If the Will was not a pour-over or if there was no Will then that second property would pass by intestacy (meaning next of kin).

The second lady was a widow who had two estate plans done in the span of 7 years before her husband died. In neither estate plan was her home transferred to her Living Trust. The best solution in this case was to start over with a new estate plan (because she was no longer married, did not need the A|B trust provisions) and work with a reputable attorney who will prepare the trust transfer deed and arrange for its recording with the county.

If you have a Living Trust, verify that your real estate and other major assets (e.g., brokerage accounts, stocks, bonds, savings account) except for retirement accounts are titled into your Living Trust.

You can contact the county recorder where the property is located and see the last deed executed and recorded on the property. If the last deed shows that it is in your Living Trust, good job! If not, work with an estate planning attorney to prepare a trust transfer deed.

As always, seek the advice of an estate planning attorney if you have questions or concerns about your own estate plan.

Nominating Executors and Successor Trustees.

The person nominated in the Will to handle the final affairs of the decedent for assets not held in trust is named the Executor.

The person nominated in the Living Trust to handle the management of trust assets while the settlors are alive, but not doing well and after they pass away are called Successor Trustees. The term settlor refers to the person(s) who created the Living Trust.

A question that must always be answered when establishing an estate plan:

Who will be your Executor and Successor Trustee for your Will and Living Trust?

1. You can nominate a slew of individuals in order of priority.
2. You can nominate two individuals to serve together as co-executors or co-successor trustees.
3. You can nominate a corporate fiduciary like a bank or a trust company.

A married couple typically nominates each other, husband and wife, to serve as executor for each other's Will and are often already trustee of their Living Trust. Then together they nominate back ups, which are usually their children.

A single individual will have to think about their nominations. Many people tend to nominate their children, if they are age 18 and older, to serve in these capacities in birth order. So, a widow may nominate her oldest son first, her second child next and then her youngest in age order. If a single individual does not have kids, he or she could nominate a sibling, a close friend, or another relative. I have heard many times that the reason a single person hasn't done their estate plan is that they have no idea who should serve in these roles. I understand that it can be a roadblock, but it should not be a permanent roadblock.

Can you nominate the same person to act as Executor of your Will and Successor  Trustee of your Trust? Yes.

Is it the best thing to do? Not necessarily, but it is very common.

If you are unsure who you should nominate for these important roles, discuss your concerns with your estate planning attorney. He or she can very well help you clarify who would be best to serve in these roles.

Real Estate Transfers to My Trust: Will My Property Taxes Increase?

One of the most common questions asked by California property owners is will a transfer of my home or other California real estate holdings to a Living Trust cause my property taxes to be reassessed?

Short answer: No.

California Revenue and Taxation Code says that where there is a change of ownership, property taxes will be reassessed. California Revenue and Taxation Code Section 62(d) provides an exception to change of ownership and says that the following is not a change of ownership:

"Any transfer by the trustor, or by the trustor's spouse, or by both, into a trust for so long as (1) the transferor is the present beneficiary of the trust, or (2) the trust is revocable; or any transfer by a trustee of such a trust described in either clause (1) or (2) back to the trustor; or, any creation or termination of a trust in which the trustor retains the reversion and in which the interest of others does not exceed 12 years duration."

Where Trustor means settlor or the person who created the trust.

Where Transferor means the person transferring the property into the trust.

To simplify, property taxes in California are reassessed and often increase when there is a change in ownership.

A transfer of real property into a trust where the owners of the property are the same as the settlors or trustors of the trust is not a change of ownership subject to reassessment.

Change of ownership involving real property and property taxes is a tricky area. A mistake can be very expensive. Always seek the advice of an attorney or CPA regarding what constitutes a change of ownership subject to property tax reassessment.

When in doubt, you can also consult with the tax assessor's office in the county where your real property is located.