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

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.

Helping our clients prepare an excellent estate plan

For some people, the thought of preparing an estate plan may seem stressful or even a little upsetting. After all, there are a variety of factors to take into consideration and who wants to think about their death? At the Law Offices of Alice A. Salvo, we understand what it's like to be in this position and remain committed to helping our clients put together top-notch estate plans. In Woodland Hills, and throughout California, those who want to ensure that their assets are smoothly transferred to beneficiaries after they pass away should make sure they approach the estate planning process properly.

From tax implications to drafting estate planning documents and family disputes over asset division, there are all sorts of estate-related hurdles that you may encounter. If you are dealing with complicated estate planning matters, it is imperative to do everything you can to identify and avoid any potential setbacks when you are creating a plan. Unfortunately, there is a often plethora of paperwork involved and some estate plans are missing important details, which can spell disaster for families who are already struggling with the loss of a loved one. However, by examining every aspect of your estate and working with an experienced team of legal professionals who understand the ins and outs of estate planning, you can enjoy the peace of mind that a well-prepared estate plan provides.

What are your tax responsibilities as a trustee?

When you’ve been named a trustee in Woodland Hills, you are expected to oversee what can be a very complicated administration process. Part of this is understanding the tax implications of a trust. Taxes in general can be very complicated, especially if your tax knowledge is limited to dealing with your own federal and state income taxes. There are a number or resources, however, to help you understand this process.

Once beneficiaries begin to receive disbursements from a trust, that money qualifies as taxable income. According to the website for the Internal Revenue Service, you as the trustee (the IRS refers to you as the “fiduciary”) have a role in the trust’s beneficiaries knowing how much tax they are expected to pay. Their tax liability is based upon the amount of income they received through the trust. Thus, you are required to figure out the trust’s accounting income in order to determine what the income distribution deduction will be. That deduction what is used to determine how much tax beneficiaries are required to pay as part of their annual return. You can to this by completing a Schedule B (IRS Form 1040).

Estate of Ernie Banks being contested between wife and friend

The task of administering one’s estate can often be a source of confusion and consternation among Woodland Hills residents. In the event that one is not abundantly clear regarding the assets that comprise his or her estate, disputes will often arise after he or she is gone. Transparency is encouraged in the valuation of one’s belongings. Thus, when the time comes to pass on those assets, both the parties charged with administering them as well as those receiving them are clear on what the estate is comprised of.

The case of late Chicago Cubs legend Ernie Banks may serve to reinforce this point. Since the Hall of Famer died earlier this year, the value of his estate is being contested between his wife and the friend whom he’d named as his executor. The executor has claimed that the actual value of the estate is only around $16,000. However, Banks’ widow is asking that proceeds from the sale of the baseball legend’s memorabilia be included in the valuation. She has also asked that financial statements from a trust fund and a bank account be disclosed. Banks’ executor, for her part, has contended that these assets were not meant to be part of his estate. The presiding judge, however, disagreed, giving the executor one month to submit the value of the aforementioned assets.

Power of attorney and financial elder abuse

As Woodland Hills residents begin the process of estate planning, one of the first issues that’s often brought up is who will act in their stead should they become incapacitated. This may often prompt some to assign a family member or friend with power of attorney. Yet handing over the right to make vital decisions on one’s behalf is not a decision that should be taken lightly. Whomever one chooses to have power of attorney is given great authority over his or her affairs. This could lead some to question exactly how far this authority goes.

Power of attorney is typically assigned to handle issues related to two important aspects of a person’s life: healthcare and/or finances. In the case of finances, the person to whom power of attorney has been given (typically referred to as an “agent”) has access to all of the financial resources of the principal (the person for whom he or she is acting). This includes assets such as:

  •          Bank accounts
  •          Real estate
  •          Investment portfolios

Avoiding estate depletion

Many of the Los Angeles County residents who come to see us here at the law offices of Alice A. Salvo have worked hard their entire lives to be able to offer some bit of an estate to their children. What many don’t understand is that even if one has a prepared a will and named beneficiaries, it is possible that the expenses of both life and death can end up depleting the assets to one’s estate before they’re ever able to be distributed. In this post, we’ll examine exactly how estate depletion occurs, and what, if anything, can be done to avoid it.

Few may realize this, but it actually can cost quite a bit to die. Medical bills, caretaker expenses, and funeral costs, not to mention any outstanding debts accrued by the deceased can end up leaving family and friends owing a small fortune. Most may assume that life insurance will cover these expenses. Yet there are two problems with that assumption: first, a 2013 Harris Interactive Study conducted for InsuranceQuotes.com showed that nearly 40 percent of American adults don’t have life insurance. Second, there’s likely a significant number beyond that who have it, but not enough to cover the aforementioned expenses. In such an event, funds are pulled directly from the estate to cover these expenses before any thought is given to dispersing them to heirs.

Is your living trust insured by the FDIC?

If you're like most in Woodland Hills, then you've probably been told at least once in your adult life that you need to start thinking about estate planning. In the world of estate planning, the buzzword that everyone is told to avoid is probate. In order to avoid probate, advisors will often recommend putting your assets into a living trust. Yet this raises the question of whether or not you're insured against the potential failure of the bank holding your trust.

The Federal Deposit Insurance Corporation offers insurance to at least $250,000 per bank for each the checking, savings, or money market accounts, or certificates of deposit that you hold there. Many of the other financial products offered by banks, however, are not covered. These include stocks, bonds, mutual funds, and annuities. FDIC protection for living trusts is available, yet to qualify for special coverage considerations, the trust account must meet all three of the following criteria:

  •          The language of the account title must include terms indicating its purpose, such as "living trust," "payable on death," or "in trust for."  
  •          The beneficiary must be in a position to collect interest on the trust's assets at the time of the bank's failure
  •          The beneficiary must be either a living person, a nonprofit organization, or an IRS-recognized charity

A look at wealthy Americans' views on inheritance

California residents who are concerned about issues with estate beneficiaries may wish to know the results of an estate planning survey of wealthy Americans. Their views on whom to leave their assets to and how much to give may be instructive.

It is estimated that from 2007 to 2061, a total of $59 trillion will be passed down to beneficiaries. For those who have a high net worth, generally seen as over $5 million, family is the main concern. A survey of 206 wealthy individuals revealed that passing their assets on to their children and other family members is their most important estate planning goal, with philanthropy first in the minds of only 4 percent. Another major concern is minimizing taxes in order to preserve assets for their beneficiaries. Many of those surveyed plan to give to family members during their lifetimes in order to limit estate taxes.

Planning for possible incapacity in California

People who are planning their estates often fail to plan for the possibility that they may become incapacitated due to an accident or illness. If a person does not include incapacity planning as a part of the overall estate plan, other family members may have difficulty with being able to take care of the person's financial needs.

There are several available options people may want to consider. A durable power of attorney will allow a designated agent to make financial decisions while the person is incapacitated. This can include the ability to make financial transactions, pay bills and conduct business on the incapacitated person's behalf. People may choose to establish a springing power of attorney, which only takes effect if two doctors agree that the person is incapacitated.

Preparing a will as part of estate planning

California residents who are over the age of 18 may want to consider writing a will. A will is a part of most estate plans, and without one, the state often decides how an individual's assets are distributed after their death. A will appoints beneficiaries who will receive those assets, and those beneficiaries might be friends, family or organizations, such as charities.

A will also needs an executor. This can be a friend, relative, attorney, financial planner or some other professional. The executor inventories the estate, distributes assets, and pays debts and taxes. This may be a complex job depending on the estate, so an individual appointing an executor may want to ask the person if they are willing to complete the task.