Probate, Estate Planning and Trust Law
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San Fernando Valley Probate & Estate Administration Law Blog

How can you talk to your beneficiaries about their inheritance?

The last thing that you want is for the terms of your estate to create discord amongst your family once you are gone. This then prompts the question of how can you have a frank discussions with your future heirs and beneficiaries about their inheritance. According to the Huffington Post, over $15 trillion dollars will go through a generational transition by 2026. When that amount of money is involved, it is difficult to expect that no one will have their feelings hurt. However, you can ease the transition of your assets in Woodland Hills by setting expectations now.

Talking individually with each beneficiary could lead to distrust as some of them may think that others are being promised a disproportionate amount of your estate. Thus, it may be best to gather all of them together so that every issue is put out in the open.

How do you file estate taxes?

When you are named as the executor of an estate in Woodland Hills, one of the tasks that you are expected to oversee as part of the probate administration process is the filing of estate taxes. Fortunately, filing an estate tax return isn’t all that different from filing your own personal income tax return.

First and foremost, you should determine if you even need to file. If the estate has any money owed to it in unpaid wages, dividends or interests from financial accounts, or payments on real estate properties, and these payments total more than $600 per year, you must report them on an IRS Form 1041. Even if the estate doesn’t generate more than $600 in annual income, you may still have to file if any of the beneficiaries of the estate is a nonresident alien.

Avoiding the potential of public guardianship

If you’re like most, you probably think that we here at The Law Offices of Alice A. Salvo stress the importance of estate planning so that you can control what happens with your assets when you die. Yet could it also be that we want you to avoid having to surrender your assets, property, and even your decision making to a potential stranger, all while you are still alive? That’s exactly what could happen if you’re placed under the care of a public guardian.

Public guardianship is similar to a conservatorship. However, in this case, the person who’s given the power over you isn’t a friend or family member, but rather a member of a public guardian group. In many cases, a single public guardian may be handling yours as well as the affairs of several other wards simultaneously.

What is probate?

Managing the affairs and estate of a deceased person in California can be a complex task. If you find yourself in this position, you should have a basic understanding of what probate is. The California Courts identify probate as essentially a form of court case. The focus of any probate case is on tying up any loose ends associated with the legal issues and belongings, assets and debts of the person who has died.

If the deceased person had a will, an executor should have been named in that document. In these situations, the executor would be the one to oversee all payments of debts and distributions of assets, real or liquid. If there was no will, the probate court will appoint an administrator to manage the estate administration. In probate, all debts must be paid before beneficiaries or heirs receive any property or money. Tax responsibilities must also be taken care of through probate.

How can assets from smaller estates avoid probate?

Most in San Fernando Valley will probably hear that they should try to avoid probate at all costs. While the standard way to avoid probate that most are familiar with is to put assets into a living trust, are you aware that smaller estates may also be able to bypass the probate court?   According to the website for The Judicial Branch of California, you can attempt to gain access to any personal property that you’re entitled to through a written affidavit.

First foremost, this action is only available to you within 40 days of your loved one’s death. If you are able to submit the request during that time table, you must then determine the total value of the estate. Included in this should be any retirement benefits or life insurance disbursements that are included in the estate. Your loved one’s real and personal property will also be included in this calculation. However, you should not include the values of any of the following properties:  

  •          Properties included in a living trust
  •          Joint tenancy property or community property
  •          Real estate property outside of the state
  •          Personal vehicles
  •          Recreational vehicles
  •          Boats and other watercraft

Examining the exemptions to Medi-Cal estate recovery claims

Most Woodland Hills residents share one thing: Debt. Repaying debts is often something that many will not be able to fully accomplish during their lifetimes. In fact, according to DailyFinance.com, nearly 18 percent of all Americans will die with unpaid debts. Oftentimes, too little thought is given to those estate heirs and beneficiaries left to deal with these liabilities.

Among the most common debts that people leave behind are medical expenses. In California, the state’s Medi-Cal program was created to help cover the costs of medical care for those who can’t afford them. Following the death of a Medi-Cal recipient, these expenses will often have to be repaid. Heirs and beneficiaries, however, may not always be left having to foot the bill from their portions of the deceased’s estate. There are certain situations where they may qualify for an exemption should the repayment of medical claims lead to a substantial hardship. The California Code of Regulations regarding estate recovery lists those qualifications as:

  •          If an inheritance would allow one to get off of state assistance.
  •          If the inheritance would be considered the primary source of income for the beneficiary.
  •          When a blind, elderly, or disabled heir has lived with the deceased for at least one year and continues to live in the same residence.
  •          When a beneficiary had served as the primary caregiver to the deceased for at least two years prior to needing more extensive medical care.
  •          If the equity in any real property is needed to ensure it can still be lived in or that beneficiaries are able to maintain a basic standard of living.

Why should you try and avoid probate?

If you are like most in Woodland Hills, your knowledge of estate planning is limited. You may often hear people say that you want to avoid having your estate go to probate at all costs. Yet then you may hear reports like that from the Judicial Council of California that state that there were 41,419 filings in probate court in the state in 2014. If so many cases do eventually go to probate court, can the process really be all that bad?

The decision to try and avoid probate is a personal one. You should know, however, that there are some disadvantages that your beneficiaries will have deal with during the probate process. These include:

  •          Slow processing times: Most estate cases go to probate facing no disputes from beneficiaries. Even still, the probate process itself can be extremely slow. Oftentimes, it can take up to a full year.
  •          Unwanted publicity: Probate cases are processed through public courts. Thus, the particulars of your estate become public record. This could lead to your beneficiaries to become targets for people looking to defraud them.
  •          High costs: The costs of your estate going through probate courts are paid directly from the assets of the estate itself. These can include courts costs and attorney’s fees. In the end, these expenses could end up costing 5-10 percent of the value of your estate.

Detailing your fiduciary duties as a trustee

Often, we here at the Law Offices of Alice A. Salvo are asked by Woodland Hills residents to explain what’s expected of them as a trustee. If you have been named as such by a family member or friend, it’s important that you gain the same understanding. The trust beneficiaries as well as the courts will expect you to know your responsibilities as trustee. Not only that, but you’re also expected to carry them out within the confines set by the law. A failure to do so could leave you open to claims of breach of fiduciary duty and the potential for civil action.

Like most, you probably will go into your appointment as a trustee knowing little about what your responsibilities are. Fortunately, those are spelled out for you clearly in the California Probate Code. First and foremost, you’re expecting to follow all of the instructions set forth in the trust instrument. This covers all aspects of how to manage the trust and how to administer it to beneficiaries. You can consider this a roadmap to help guide you through the process.

An overview of revocable living trusts

From irrevocable trusts to a testamentary trust or inter vivos trust, people have a number of options when it comes to putting together a trust. In Woodland Hills, California, some people who want to ensure the proper distribution of assets opt for a revocable living trust. While revocable living trusts are quite popular, it is important for people to understand the details of this arrangement and how it will fit into their estate plan.

The Consumer Financial Protection Bureau covers revocable living trusts on their website. For those who are thinking about setting up a revocable trust, it is important to understand the different roles and responsibilities people have with these trusts. First, there is the settlor (also known as the trustor or grantor), the individual who creates the trust. Next, there is the trustee, the individual (or financial institution) responsible for making decisions regarding a trust's property. Sometimes, co-trustees and successor trustees are also named. Finally, there are beneficiaries, the individual(s) who receive the property from a trust.

Guiding executors through the probate process

When a loved one passes away, moving forward can be incredibly difficult. In addition to all of the emotional pain that often comes with the loss of a loved one, those who have been named executor of an estate may have no idea how to approach the probate process or which step to take next. At the Law Offices of Alice A. Salvo, we work hard to provide solutions for clients who are in this position in Woodland Hills, California.

From dealing with tax-related matters to distributing an estate's assets, there are a wide variety of responsibilities that you may have if you are the personal representative of an estate. If you have a fiduciary responsibility to manage a loved one's estate properly, you should closely analyze the ins and outs of the probate process and thoroughly assess every aspect of the estate. Also, if your loved one has passed away and did not leave behind a will, it is essential to make sure that you address estate-related matters correctly.