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San Fernando Valley Probate & Estate Administration Law Blog

What are my inheritance rights?

You probably believe that you have the right to inherit from your spouse, domestic partner or parents when they die. While this is generally true, what you may not realize is that if a Californian dies without having made a will, (s)he dies intestate.

The California Legislature explains that in this situation the intestacy laws of California determine the heirs and the proportion of the decedent’s estate that each heir receives. Any verbal inheritance promise that the decedent made to you during his or her lifetime is irrelevant.

Understanding self-settled trusts

Well-to-do California residents may have heard about self-settled trusts and become intrigued with the idea of establishing one to protect their assets. Before rushing ahead, however, they need to be aware that while California does not prohibit this kind of trust, neither is it one of the 14 states that specifically allow one. Consequently, the very benefits a Californian seeks to receive from a self-settled trust may not actually be available in this state.

As Palisades Hudson Financial Group explains, self-settled trusts often go by the names of spendthrift self-settled trusts or self-designated trusts. They are irrevocable trusts in which the grantor, i.e., the person who establishes the trust, is also the trust’s primary beneficiary, i.e., the person who receives the trust assets and/or the income they produce.

Certain missteps could invalidate your estate plan

California readers understand the importance of having a strong estate plan in place. Making the effort to have a will and other documents can ensure you have a say over what will happen to your estate and your medical care in the future, but there are certain common mistakes that could actually derail your carefully laid plans.

Missteps and errors in the estate planning process can be costly. They can lead to complications for you and your loved ones, and they can ultimately lead to legal battles and financial loss. Through careful planning and thoughtful effort, you can avoid common estate planning mistakes and look to the future with confidence.

How do you benefit from a living trust?

You may have heard your California friends and neighbors talking enthusiastically about their living trusts and wondered what a living trust is, whether you might want to set one up, too, and what benefits you will receive if you do. As RBC Wealth Management explains, a living trust is one you establish during your lifetime and over which you have complete control.

Basically you place all or whatever portion of your assets you choose into a trust, designate yourself and/or someone else as the beneficiary, and appoint yourself or someone else as the trustee. At that point the trust owns all the trust assets and the trustee immediately begins managing and using those assets for your beneficiary’s benefit. Since you yourself can be both the beneficiary and the trustee, this means that you still maintain complete control over your assets.

Family-friendly ways to avoid an inheritance dispute

When you have a close family, the last thing you would expect after you are gone is for your loved ones to fight over your estate. Unfortunately, this is a common scenario for many California families, as we at the Law Offices of Alice A. Salvo are aware. Naturally, you want to help your family avoid conflict and stay close, and one of the most effective ways to achieve this is by carefully planning your will or trusts to avoid any confusion or hard feelings.

Choosing the executor of your will is one of the first things to consider even before you consult your estate planning attorney. According to AARP, the person you choose as your executor should be someone trustworthy, intelligent and conscientious. Your first instinct might be to choose your eldest child. After consideration, however, you might realize one of your younger children or an impartial third party might be best suited for the task. The following ideas might also help you prevent a probate dispute after your death:

  • Consider gifting some of your assets to your relatives while you are alive.
  • Hold a family meeting, during which you allow your loved ones to choose heirlooms to remember you by, and make a list of everyone’s choices to include in your will.
  • Be fair and equal in your estate distribution so nobody feels left out or slighted. If you must exclude a family member or leave an unequal inheritance, explain your reasons clearly in your will.
  • Update your estate planning when there are significant changes to your assets or family situation.

What are the main benefits of a trust?

As a reasonably well-to-do California resident, you may have heard your friends and neighbors talking about their various trusts and wondered if you, too, might benefit from setting up a trust. There are many different types of trusts, and which one(s) may be best for you depends on your own situation, goals and objectives.

FindLaw points out, however, that in general, all trusts provide the following benefits

  • Your ability to place conditions on when, to whom, and under what circumstances your trustee distributes the trust assets
  • Your ability to distribute your assets to your heirs after you die without having to go through probate
  • Your ability to reduce your estate and gift taxes
  • Your ability to protect your assets from creditors and lawsuits
  • Your ability to appoint a successor trustee who acts in the event that your primary trustee dies or becomes unable to continue serving

What is a durable power of attorney?

You may have heard your California friends and neighbors talking about their durable powers of attorney and wondered what these things are, how they work, and whether or not you should have one. As explains, a durable power of attorney is your signed legal document authorizing someone else to make decisions for you in the event you cannot make them for yourself.

Your durable power of attorney takes effect the moment you sign it and remains in effect until you revoke it or until you die, whichever occurs first. The one exception is if you designate your spouse as your representative a/k/a your attorney-in-fact and then the two of you divorce. In this situation your power of attorney automatically revokes when your divorce is finalized.

Is my estate plan outdated due to the new tax law?

If you are a California resident who already has an estate plan, you may well wish to review and revise it based on the Tax Cuts and Jobs Act that Congress passed late last year. As Market Watch explains, this new law exempts estates worth up to $11.2 million from having to pay any federal estate tax. This is double the amount of the prior exemption.

Since California has no estate tax of its own, the new federal estate tax exemption means that unless you are ultra rich, your heirs will receive your entire estate tax-free when you die. In addition, the federal estate tax exemption for couples is now $22.4 million. What may make your existing estate plan obsolete, however, is the fact that in order to avail yourselves of this new exemption, the estate planning documents pertaining to both you and your spouse must contain the proper wording so as to bring about this portability aspect.

Understanding what a trustee does before choosing one

Many people put off estate planning because they don't want to think about their own deaths. Others put it off because they think it's only necessary for rich or old people. Then others put it off because they are overwhelmed by the choices they need to make and the variety of options.

In reality, a large number of people more than likely fail to create an estate plan due to a combination of all three. If this is you, then you may want to consider the fact that without an estate plan, the state of California decides who inherits your property. The fact is that everyone will pass away at some point. Estate planning has something for everyone, and an attorney can help you determine what combination of documents will work best for you.

What is a Medicaid spend-down?

If your parents are elderly California residents and you fear that you may one day have to make the painful decision to move them out of their home and into an assisted living facility or nursing home, you should begin planning for this eventuality as soon as possible. Since your parents likely are not wealthy enough to afford the extraordinary costs of assisted living or nursing home care, applying for Medicaid may be their only option.

Medicaid is the joint federal and state program that pays for the care your parents will one day need, but there is a catch. Your parents must be “indigent” in order to qualify for Medicaid. What this means is that neither of them must own more than $2,000 worth of assets. Despite the fact that they are not wealthy, however, they probably have more than $4,000 worth of combined assets. What can they do? The answer, as reported by US News, may be a Medicaid spend-down

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