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

Making estate planning easier for the family

Some California residents may know that one facet of estate planning involves explaining to family members what the estate plan entails and what to do if that individual should die. Because an estate plan may be complex, there might be an easier way to take care of those details without unduly stressing family members.

One estate planning suggestion is to place the details of the plan with an attorney so that beneficiaries may make a phone call to that attorney to find out what the estate entails and where the documents for the estate are located. This may include a will and information on retirement accounts, insurance policies, banking and business accounts, and other assets. Instructions about paying bills or other ongoing financial matters may also be included in the estate plan.

Duties of a trust administrator

Residents of California may wonder what is involved in trust administration. A trust has two parts, income and principal, and the administrator, also known as the fiduciary, is in charge of managing both of those parts. The principal consists of all the assets that are in the trust, while the income is paid out to beneficiaries. The beneficiary may also eventually inherit the principal or receive income until death. At that time, the principal may pass to another beneficiary.

A fiduciary is responsible for making sound decisions in managing the assets and investments and avoiding taxes as much as possible. As a result, a financially inexperienced fiduciary is often advised to seek expert advice. Beneficiaries will want to know that fiduciaries are investing wisely, and a written investment plan can help reassure heirs about the fiduciary's intentions.

Trusts as important estate planning tools

While many California residents think that a will is the only document they will need to pass on their assets to beneficiaries when they die, there are other estate planning documents that can also be useful in a variety of circumstances. As one example, the importance of establishing an advance health care directive to ensure that the maker's wishes concerning the types of medical treatment that will be allowed in the event of incapacity is well established. Another type of document that can be applied to a variety of situations is a trust.

In its most simple form, a person will place property that will be managed by a trustee for the benefit of a named beneficiary into a trust. The trustee can be an individual or an institution, such as a bank, and that entity is the legal owner of the trust property. The beneficiary is considered the property's equitable owner. The trust itself can be created either during the grantor's lifetime or by a provision contained in the maker's will.

Examining the estate planning issues that business owners face

Woodland Hills business owners may be interested in some information on the particular estate planning issues that they may face. These issues include not having a business plan at all or having an incomplete or outdated one.

According to one survey, just over 70 percent of business owners had an estate plan. The definition for "estate plan" in this case was set low; any of the surveyed individuals who had a will were included in this category. Many who have not begun their estate planning say that it is because the subject is very difficult to think about. Others feel that they do not have the need for a comprehensive estate plan. However, estate planning can be extremely important when it comes to dealing with business issues after one's death. This is because the business itself is usually one of the more valuable assets in the owner's estate.

Ernie Banks' children, caregiver battle over his estate

California baseball fans may have heard that the will of Chicago Cubs baseball great Ernie Banks is the subject of a tumultuous fight in Illinois. Banks, affectionately known as Mr. Cub, died of a heart condition on Jan. 23 at the age of 83.

Banks left his entire estate to a woman who was his talent agent and caregiver, completely excluding his three adult children and estranged wife. However, his family noted that the baseball star's death certificate listed dementia as a "significant condition contributing" to his death. This is relevant because Banks changed his estate plan only three months before he died, signing over his power of attorney, new will, health care directive and trust solely to his caregiver. The Banks children claim that she manipulated their father into changing his will and kept him from talking to his family in the months leading up to his death. An attorney for the Banks family said his children plan to contest the will in court.

Estate planning consideration

As many California residents know, the Internal Revenue Code contains provisions that deal with the imposition of taxes on certain transfers of property from one person to another. The estate tax applies in some cases to transfers made from an estate after the owner's death, while the gift tax is imposed on transfers made while the giver is still alive. In each case, there are certain exemptions, exclusions and credits that may apply.

For the 2015 taxable year, estates with a gross value not in excess of $5.43 million are not subject to the estate tax. In the case of married couples, the estate of each spouse is allowed the $5.43 million exemption, with any amount left over after the first spouse dies carried over to the survivor. With respect to the gift tax, people are allowed to make gifts in the amount of up to $14,000 per recipient in a calendar year without having to pay any tax. A gift tax will be imposed on gifts in excess of that amount.

Estate planning ideas from the Robin Williams case

The late Robin Williams had prepared for his eventual death with careful estate planning, drawing up an estate plan that included a prenuptial agreement, trusts and an updated will. Even his careful preparations did not prevent well-publicized squabbles. Estate plans focus on high monetary value items. However, the personal items often cause disagreements. Californians can learn three things from this example for their own estate planning.

First, it can be beneficial to identify what non-titled property is important for the family legacy. Some estates may be able to avoid disputes if the planner discusses the distribution of assets with the potential heirs. This may help certain sentimental or niche possessions find their way to individuals who would value them the most.

Lessons from celebrity estate plans

California residents might be able to learn something about estate planning by observing what has happened in that regard to certain celebrities. Although the average person will leave behind fewer assets than a movie star, there are still many valuable lessons that can be learned from the way that celebrities planned or failed to plan their estates.

An example of a person who failed to finish planning his estate is Sopranos' actor James Gandolfini. Although Gandolfini drew up a will soon after his youngest child was born, he did not create a trust. After he died at the age of 51, fees and taxes ate up around 55 percent of his estimated $75 million estate. When Heath Ledger died at the age of 28, he left behind an outdated estate plan that did not list his daughter as a beneficiary. As a consequence, Ledger's family became involved in an ugly legal battle over his $20 million estate.

The benefits of a revocable living trust

Some California residents who are planning on how their assets will be distributed when they die may want to consider the use of a revocable living trust. This type of vehicle may make it possible for assets to pass to beneficiaries while avoiding probate. It does not lower the estate tax burden, but probate can be expensive and time-consuming, so a revocable living trust might be a solution. However, before proceeding, those who are interested should find out whether avoiding probate is necessary based on the size and nature of their estate.

One advantage of a revocable living trust is that it allows an individual to retain control over the property. The grantor can revoke the trust or change its terms at any time. A revocable living trust can also protect assets if the individual becomes incapacitated.

Strategies to avoid probate in California

If real estate is the only asset that an individual owns at the time of his or her death, it may be possible to avoid probate. One such strategy is to title the real estate in the name of a living trust. This allows the owner of the property to name a beneficiary who will receive the property after the current owner passes away.

Another way to avoid probate is to create a joint tenancy situation with survivorship rights. In that scenario, the person who is also on the deed will receive sole ownership of the property after the other person on the deed passes on. In community property states, it is important to note that real estate is community property that is to go to a surviving spouse.