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San Fernando Valley Probate & Estate Administration Law Blog

What is a charitable trust?

If you have never heard of a charitable trust, you may find that establishing one or more of them is the best way you can give back to your church, your alma mater, your favorite California charity, or any number of other organizations to which you regularly donate money. But the bonus, as Fidelity.com explains, is that while you give to these organizations dear to your heart through these trusts, the trusts also give back to you

The great advantage of a charitable trust is that it gives you the opportunity to split your trust’s assets and the income they produce between your favorite charity and yourself and/or another noncharitable beneficiary. In addition, you also can designate yourself as the trust’s trustee.

How often should you update your estate plan?

Remember how excited you were when you finally got your California estate plan created and established? You likely felt as if a giant burden had fallen off your shoulders. You knew you had perfectly set up your will, trusts, powers of attorney and all your other legal documents so as to ensure protection of yourself and your family, both now and in the future, to the greatest extent possible.

Unfortunately, even the best estate plan needs occasional updating. As Fidelity explains, experts recommend that you review your estate plan at least every three to five years. Why? Because people and their lives inevitably change over time.

How can I avoid inheritance disputes?

It’s not uncommon for contentious fights to break out among families when it comes to inheritance issues. However, parents leave assets to their kids to help them, not to cause strife that can be both expensive as well as emotionally trying. While you can’t always prevent fights from occurring, AARP recommends the following advice to minimize the impact of estate disputes after you’re gone.

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Older adult children may struggle to care for ailing parents

As you age, you may feel more and more appreciative of the fact that your parents are still around. Many people lose their parents at young ages and others are fortunate enough to live a considerable portion of their lives with at least one parent in the picture. While you understand that your parents will not live forever, you may wish that they could.

Of course, as you get older, so do your parents, and the likelihood of one or both of them needing long-term care is a real possibility. While you may feel that you could provide the care that they may need, you may want to remember that the need for care may not come about until you reach retirement age yourself.

What constitutes undue influence?

If you fear that your elderly, ill or disabled parent in California is developing too much reliance on his/her caregiver, you may wish to take preventative measures to ensure that (s)he does not change his/her will while under this person’s undue influence. As explained by a state bar association at its recent meeting, undue influence occurs when one individual assumes a power position over another individual and misuses that power to overcome the victim’s free will and substitute his/her own will.

Your parent must “be of sound mind” to make a valid last will and testament. This means (s)he must have the following knowledge and capabilities:

  • (S)he must realize the nature and extent of his/her property and assets.
  • (S)he must realize and remember who the law expects him/her to name as heirs, such as a spouse, children, grandchildren, etc.
  • (S)he must realize that (s)he is making his/her last will and testament.
  • (S)he must not be under any delusions or influences that could cause him/her to make unusual, unexpected or “surprise” bequests, particularly those having a large value.

What is a spendthrift trust?

If you and your spouse are like most California parents, you make every effort to raise your children to become responsible adults, financially and otherwise. Unfortunately, these lessons do not always take with some kids, particularly when it comes to handling money responsibly. Today’s “I want it now and I don’t want to wait” culture provides your children with an influence every bit as large as your own more conservative and wise approaches to spending.

Should you now find yourself in the position of having considerable wealth to pass down to your children but not trusting what they might do with it, you may wish to consider establishing a spendthrift trust for each of your kids. As reported by Forbes, you can do this now by means of inter vivos trusts, i.e., those you set up during your lifetime, or by means of your will and/or other testamentary documents.

What constitutes a breach of fiduciary duty?

When you become the trustee of someone’s trust or the executor of his or her California estate, you also become a fiduciary. What this means is that the grantor of the trust or the testator of the will trusted you enough to put you in a position of authority to carry out his or her wishes. In other words, you have a duty to the heirs or beneficiaries to do the best you can to manage and distribute the assets per the provisions of the trust or will.

As FindLaw explains, you have many fiduciary duties. Should you fail to perform them properly, the heirs or beneficiaries can sue you for breach of your fiduciary duty.

Revocable vs. irrevocable: Which type of trust is better?

As you go about establishing your California estate plan, you likely will come face to face with the issue of trusts sooner rather than later. As reported in U.S. News, all trusts are stand-alone legal entities, meaning that they and the assets you put into them are separate and apart from you personally. Trusts come in two basic types: revocable and irrevocable.

As its name implies, when you set up a revocable trust, you can add or remove assets from it and change its provisions any time you wish in the future, as well as the person or entity you designate as trustee. Conversely, when you set up an irrevocable trust, you relinquish all control over both the assets in it and the trustee who manages and distributes those assets. In other words, an irrevocable trust is “set in stone” once you establish it.

What is a pour-over will?

You likely have already made a California will, but do you need to make a new one? You may if you have established a living trust. As FindLaw explains, only a pour-over will can ensure that your living trust works the way you intend it to work.

Your pour-over will gives instructions to your executor to pour over any assets you own at the time of your death into your living trust. Consequently, it is your failsafe legal document that provides you with the following advantages:

  • It gives you peace of mind knowing that you no longer need to worry about forgetting or neglecting to place assets in your living trust.
  • It completes your estate plan.
  • It ensures that you maintain your financial privacy to the greatest extent possible.

How can trusts help you achieve your goals?

As you started your estate planning journey, you may have come to realize that what you thought you wanted with your plan differs from what you truly want. This type of revelation is common when it comes to estate planning as many people do not have enough information regarding their planning options and what an estate plan can really do for them.

In particular, you may have become more interested in trusts and how the different types could help you achieve various goals. While you may have originally thought about creating a will to bequeath your assets to your loved ones, you may now have hopes of creating a lasting legacy for generations to come.

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