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

Wills and estate planning

In California, one of the best ways to plan for the future is to create a will. Wills are legal documents that direct how a person's estate will be distributed after they have passed away. Without a will, the distribution of a decedent's property will be conducted by a probate court. This could mean that a person's last wishes for their property and possessions will not be considered in the distribution.

In order to create a will, certain requirements must be met. The person who creates the will, known as the testator, must be at least 18 years of age and must be able to understand what they are doing. The will must include a statement specifying that it is a last will and testament, and it must name an executor. An executor is a person who is entrusted by the testator to make sure that the will is carried out according to their wishes.

Estate planning and trusts in California

People who are deciding how to handle their estates may have heard of trusts but may be uncertain of exactly what trusts do. Because their uses are diverse, there are also many different types of trusts available. The type of trust a person may choose to establish will largely depend on the goals they are seeking to accomplish.

Trusts may be inter-vivos, which mean they are set up to operate during the grantor's lifetime, or testamentary, which means they are established in the testator's will and take effect upon their death. Trusts may also be revocable or irrevocable. Revocable trusts are those that can be amended or revoked at any time by the grantor. The grantor of a revocable trust maintains control over the assets contained within the trust. Irrevocable trusts may not be changed, and the assets are owned by the trust itself. Changes are only allowed by the agreement of the trust beneficiaries. Irrevocable trusts are not subject to estate taxes, while revocable ones are.

The importance of writing a will

It is very important for every adult who resides in California to have a legal will prepared because without one, the decedent's assets will be automatically distributed by a court according to the state's laws. In most cases, the assets will go to the decedent's nearest relations, such as a spouse or a child. This can be problematic for some families, and it may also incur unnecessary costs.

A will reveals the testator's exact wishes addressing a number of details regarding the distribution of his or her assets. The will allows the testator to select a fiduciary to handle all of his or her affairs. The fiduciary can be an individual, bank or trust company. Furthermore, if the testator has underage children, a guardian can be appointed in the will to care for them, and a trustee can be named to manage trust fund assets designated for the children's care. A testator who acts as a child or grandchild's custodian of assets, as outlined in the Uniform Gift (or Transfers) to Minors Act, may also appoint a successor custodian in the will.

When should someone change a will?

As many California residents may know, life events may necessitate changes in a person's will. This may be done by rewriting the original will to ensure that the decedent's wishes are followed. Knowing when a will needs to be changed and keeping it updated is important.

Marriage is a milestone that marks new beginnings, and most advisers urge a recently married couple to set up wills to mandate how their estates will be handled. State intestacy laws provide a surviving spouse with a percentage of the estate if the other spouse dies without a will. In common law marriages, legal in some states, if qualifications are met, the percentage of the estate given to a survivor may be the same as if they were married. Non-married partners are not routinely given a percentage of an estate in states without common law marriage.

Why California residents may wish to consider trusts

California residents with assets of $100,000 or more may be wise to consider using trusts as part of an estate plan. Trusts allow an individual to stipulate when and how their estate will be distributed, and they can provide peace of mind by ensuring that all heirs will receive their inheritance. Trusts may also mitigate the impact of estate and gift taxes.

Trusts may be a valuable estate planning tool when a significant amount of the estate consists of assets such as real estate, art and antiques or a business. Trusts also allow for payments to be made at specific times such as when a child comes of age or graduates college. Using a trust may also be a consideration for those who worry that their estate would be exhausted before their children come of age. Another benefit of trusts is that they allow disabled relatives to be provided for without impacting their qualification for assistance programs such as Medicaid.

Estates with charitable trusts must satisfy IRS rules

The IRS maintains specific definitions concerning what constitutes a valid trust that can be included in a Californian estate. Although many people want to donate assets to charitable causes, the estate devices they employ to do so don't necessarily benefit from the same tax protections a charitable organization might. For instance, charitable trusts that fail to satisfy the exclusion requirements demanded of public charities are usually deemed tax liable.

The taxes applied to charitable trusts depend on both their investment incomes and the dates of their founding. If someone creates a revocable trust while still living, and it changes to an irrevocable structure after they die, said trust will not be deemed charitable until a settlement period has passed. The IRS applies the same rule to trusts that were created by wills to disburse assets to charitable beneficiaries.

Preventing will contests in California

The vast majority of wills in California are presented to the probate court and their instructions are carried out without any problems. However, on rare occasions the validity of a will may be contested. Most successful challenges to a will are based on either the assertion that the person who made the will was not competent to do so, or that the testator was under the undue influence of someone else so that the will does not reflect the individual's true wishes.

Proving a will is not valid does not always end with the entire will being thrown out. A court has the discretion to invalidate the will in part and leave other parts of it enforceable, or to substitute provisions in a will.

Understanding the notification responsibilities of a trustee

California heirs and trust beneficiaries may be interested in some information about the notification responsibilities that a trustee has in trust administration. These responsibilities can affect a beneficiary's rights to the property contained in the trust, making them important to understand.

Under the California Probate Code, a trustee who is tasked with administering an irrevocable trust must perform certain actions with regard to the trust. First, the trustee is required to provide the beneficiary with information about the terms of the trust. The only exceptions to this rule are when the trust is revocable or the trustee is the beneficiary.

Children born after a parent dies might be an heir

When people pass away in California, a probate court often decides what happens to their belongings. A main component of this process is deciding who are the beneficiaries of the estate. Children are usually considered heirs to an estate, even if the children are born after their parent dies. However, California law states certain conditions that must be met for children conceived and born after a parent's death to receive an inheritance.

Children or their representatives must prove that that a child is entitled assets by providing specific evidence. First, it must be shown that the person who passed away, known as the decedent, agreed in writing to his genetic material being used to conceive a child posthumously. The document must be signed and dated by the decedent, and the person who used the material to conceive must have been also named. Any modifications to the document giving authorization must have been done in writing.

Designating estate beneficiaries in California

Anyone holding a policy with a payout upon the death of the policy holder must designate beneficiaries to inherit the funds. In addition to naming beneficiaries for life insurance policies, retirement plans, annuities and IRAs, California residents should carefully consider how they select their heirs. To preserve a legacy, careful estate planning is essential.

An annual review of beneficiaries helps to ensure that documentation is up-to-date. The recent loss of a loved one may necessitate changing the heirs in a life insurance policy or another asset. Other major events, such as the birth of a child or grandchild, buying or selling of a home, divorce or marriage, should spark a review of beneficiaries. If any of the heirs have special health care needs, the estate holder may wish to create a special needs trust that will be managed by a trustee appointed by the creator of the trust.