Sacramento Estate Planning Blog

Do you know what to do when a friend or loved one passes on but something seems suspicious about their will?  Most people don’t.

The feeling that something is fishy in your friend or loved one’s estate plan is a common one, but most people do not know how to act on it.  Further, many people probably assume that because a will has to go through the court process of probate, that if anything is wrong, it will be discovered and fixed.  This is not necessarily so, and quite frequently absolutely wrong.

Probate departments are generally small and understaffed, they don’t have time to get to know each and every decedent that comes through their department as a will to be administered. Further, each will has an administrator, either assigned by the will or by the court who is supposed to be dutifully carrying out the wishes of the deceased. Read More »

When you take care of some of the details for your final arrangements, you alleviate some of the stress that typically falls to your loved ones during a difficult time. This alone makes it worthwhile to plan some of your own final arrangements.

What You Should Know About Planning Your Final Arrangements

One of the biggest misconceptions is that the best place to put instructions for your final arrangements is in a will. This is a bad idea because of the fact that your will may not even be read until long after all of the decisions for your final arrangements have already been made. Your will is the place to indicate who you want to care for your minor children, how to divide your property, etc.

To ensure that your wishes for your final arrangements are known, talk to your loved ones about what you want and consider creating a separate document that contains the instructions for your final arrangements. Make sure that the executor of your will knows where this document is located.

Sacramento Estate Planning Attorneys

Another fact to keep in mind is that if you don’t already have your final arrangements made at the time of your death, someone else will be left with this task, as well as being legally responsible for the expense. This responsibility typically falls to your spouse, your children, your parents or next of kin. By not making your own arrangements, you will be leaving a great financial burden on your family. In addition to this, it is not uncommon for there to be family disputes that arise over disagreements on how these arrangements should be carried out.

Some of the instructions that you can include in your final arrangements document include:

• Instructions for burial or cremation,
• What mortuary you have made arrangements with,
• Details for the funeral ceremony,
• The type of casket you want, if you have not already picked it out with the mortuary,
• Where you would like to be buried, or other instructions concerning your final resting place
• Details for your memorial marker

The cost of a mortuary’s services to take care of your final arrangements will vary, which is why it is important to plan long before you think these services will be needed. This way you can compare services and cost.

Taking care of your own arrangements not only leaves you with peace of mind, but it will help your family weather the difficulty of your death when that times comes.

The Estate Planning Lawyers of Bowman & Associates help clients throughout California. If you or someone you know has legal questions, contact our experienced Wills, Trusts & Probate Attorneys in Sacramento and Folsom.

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The Sacramento Bee reported on April 11, 2010 in “Personal Finance: Estate planning prevents family feuds” that when there is poor estate planning, there will be a dispute over assets by heirs when a person dies. Toronto-based attorney Les Kotzer was quoted in saying that many times heirs will spend more on attorneys fees to fight over assets, exceeding the value of the property they fight over.

All of a person’s assets are included in an estate. This could include assets held in a person’s name alone or jointly with others. Some married people, and parent-child combinations, think that joint tenancy with rights of survivorship is all the estate planning needed because in a joint tenancy, when a joint owner dies, the surviving joint owners automatically receive the decedent’s interest in the property without probate. The problem with this is that the amount of the estate held in joint tenancy is subject to all of the liabilities of all joint owners. If one owner gets a judgment, tax lien, files for bankruptcy, the lien holder can take the entire property to satisfy the judgment. For example, if a child gets sued for defamation from postings on the Internet, the parent who put the title of his house along with the child, could lose his house even though the parent had nothing to do with the child’s tort.

The value of an estate is the fair market value of all after deducting debts such as car loans, mortgages. Assets are not just physical or real property that people see, but may include payments due to someone from a judgment, tax refund, outstanding loan, inheritance. The value of an estate is used to calculate estate taxes after death, and whether beneficiaries might need to pay capital gains taxes. Part of estate planning is making sure there are enough resources to pay taxes so that there is property left over to the beneficiaries to enjoy. Read More »

Losing a loved one is one of the most heartbreaking experiences that a person can go through in life. Even as a person is grieving over their loss, however, he or she may still have to make sure that decedent’s estate is settled. In a perfect world, the surviving loved one(s) tasked with settling an estate, or working with an executor to settle an estate, will be knowledge about a number of matters:

• Whether there is a will or a living trust
• The names (and account numbers) of the decedent’s banks and/or brokerage firms
• Whether the decedent had a safe deposit box
• Where the will and living trust documents are located

Here are some steps to take to help settle the estate after your loved one has died. If you are the executor, it will be your job to make sure that these matters are taken care of. Even if you are not the executor, you may want to take part in settling these affairs of estate:

• Locate and read the will.
• If you are not the executor of the estate, then contact the executor.
• Consider whether you need the help of an estate planning attorney to settle certain financial and personal affairs for your loved one.
• If there is a will, look into starting the probate process and make sure that the executor begins proceedings immediately.
• Account for your loved one’s assets—those that are listed in a will or trust and those that are not.
• Locate documents pertaining to your loved one’s assets, such as insurance policies, benefit information, retirement plans, etc.
• Notify the relevant government agencies, as well as banks, creditors, etc., of the death.
• File any life insurance claims.
• File the deceased’s last taxes.
• Open a checking account in the estate’s name.

An estate planning attorney can help you settle your loved one’s estate, including represent you in probate court, contest a will for you, or help you make sense of the different estate planning tools that your deceased loved one may have used.

Fidelity.com offers some basic information about wills, probate, and the size of an estate.

Wills

A will clarifies how and to whom the deceased’s assets are to be distributed. A will can officially indicate:

• An executor (also known as the “personal representative”) of the deceased’s estate
• The estate’s beneficiaries
• How and when the beneficiaries are to receive the estate assets
• Guardians for any minor children

There are, however, limitations in the property covered by a will. The will only designates the transfer of ownership for assets not distributed in any other way. Therefore, regardless of what is stated in a will, the following designations generally take precedence in determining to whom assets are transferred:

• Ownership registered as joint tenants with right of survivorship
• Ownership by a trust
• Investments registered as transfer on death (TOD) to a named beneficiary
• Named beneficiary of a retirement account
• Named beneficiary of an insurance policy

Assets covered by these designations are transferred, as appropriate, directly to the designated joint owners, transferees, or beneficiaries once paperwork is complete.

Probate

Probate is a legal process for settling an estate in accordance with the will of the deceased. Assets owned and registered in the individual name of the deceased that do not already have a beneficiary—including cash, investments, personal property, and real estate—make up what’s called the “probate estate.” These assets are controlled by the will and “pass through” the probate process in order for ownership to be transferred. All other assets “pass outside” the probate process.

Size of Estate

How estates are settled varies from state to state, but options also vary according to the estate’s overall value. A large estate generally involves having the state’s probate court validate the will or certify that the deceased died intestate (that is, without a will).

Settling a large estate also involves fulfilling other administrative matters, called “probating the estate.” Smaller estates can sometimes be settled through more informal means of administration. Read More »

Half of Americans don’t have any of the most basic estate planning documents, including a will, a living will and financial and medical powers of attorney, needed to protect them (and their assets) if they’re incapacitated, according to a new survey. The national telephone survey of 1,022 adults, conducted in December by Harris Interactive ( HPOL – news – people ) for Lawyers.com, a unit of Reed Elsevier ( ENL – news – people ), found that many of those who had done no planning were deterred by the legal cost and mistakenly believed that those without large assets didn’t need to plan.

Of those surveyed, only 35% have a will directing who gets their assets and only 29% have a living will that states their views on end of life medical procedures. Not surprisingly, older Americans were more likely to have made some preparations: 77% of adults over 55 had signed at least one of the needed documents, compared with 24% of those under 35. There was no noticeable difference in planning between men and women, but Americans with more education were far more likely to have planned.

Even the oldest respondents were hardly well prepared. For example, only 48% of those 65 and older said they a financial power in place authorizing someone to make financial decisions for them if they were incapacitated and only 51% said they had a health care power in place. Perhaps spurred by hospital admissions personnel, who usually ask if admitted patients have a living will, 58% of those 65 and older reporting having this crucial document.

The survey delved into why so many Americans lack estate planning documents. In a sign that the recession is taking its toll on planning, 44% of those without any documents said the reason was because they were more focused on “essentials” like paying bills and buying groceries. Feeding the neglect, however, were misconceptions about the primary purpose of estate documents or what might happen if someone hasn’t planned.

For example, 19% of those with no documents said they didn’t have sufficient assets to warrant estate planning. Yet wealth and the estate tax have little to do with the need for basic legal documents should you become disabled. “What a lot of folks don’t appreciate, and this is consistent across income levels, is there are a lot of reasons to do planning that are wholly unrelated to estate taxes,” says Dana Fitzsimons, an estate lawyer with McGuire Woods in Richmond, Va. For example, without a living will and proper powers of attorney, your family might have to go through costly court proceedings to get a judge to appoint someone to make medical decisions for you. Or, as in the tragic and much politicized Terry Schiavo case, family members could be driven apart by disagreements over what your end-of-life wishes really are. “Uncertainty can cause disagreements and rifts in family,” warns Fitzsimons.

Even if there are no end of life questions, you need at least a basic will to make sure the right person gets your assets. Most couples without estates big enough to be taxable write “I love you” wills leaving everything to each other. But if a husband or wife dies without a will, the surviving spouse inherits everything in only 16 states.

Of course, the higher your net worth the more complicated–and tax-driven–estate planning becomes. The federal estate tax is in a state of flux. It has been temporarily repealed for 2010, although it could be reinstated retroactively. Under current law it is set to spring back to life in 2011 with a $1 million per estate exemption. Read More »

Much has been written recently regarding the use of “living trusts” (also known as a “revocable trust” or “inter vivos trust”) as a solution for a wide variety of problems associated with estate planning through wills. Some attorneys regularly recommend the use of such trusts, while others believe that their value has been somewhat overstated. The choice of a living trust should be made with the advice and counsel of an experienced estate planning attorney after consideration of a number of factors.

This brief summary borrows heavily from an ABA article on the subject and is intended to provide a framework of basic knowledge regarding “living trusts” in general.  I hope this will give you a little background on living trusts as an estate planning tool and inform you if there is a living trust in your life that you have questions about.

The term “living trust” is generally used to describe a trust which (a) you can create during your lifetime, and (b) you can revoke or amend whenever you wish to do so. These are commonly called “revocable” living trusts, because you can revoke them at any time you see fit.  “Irrevocable” trusts are far less common and generally only used in specific circumstances for tax purposes we won’t get into in this article.

The most common scenario is one where you work carefully with an estate planning attorney to craft a trust that carries out your wishes.  Then you put most of your major assets into the trust, acting as “settlor” or “grantor” of the trust, and you also act as the “trustee” who manages the trust assets during your life.  This has several profound effects on your estate planning, the most notable being that this mechanism is one of the most effective to retain your assets during your life and yet pass them on at your death without requiring a formal probate.  This is done by also executing a simple “pour over” will that puts any remaining assets outside of the trust into your trust upon your death.

Generally speaking, the trust document also specifies who will act as trustee in the event of your incapacity or death.  If you become incapacitated, you don’t need to worry about granting someone power of attorney to manage the assets you’ve already put into the trust, the next trustee in line will assume control of the assets by operation of the trust and must guard those assets for your benefit for the rest of your life, unless you’ve instructed otherwise.  Usually, these trusts provide that upon your death, the trust becomes irrevocable (the assets in the trust are “locked in”) and must be disposed of or preserved according to your instructions (in the trust).

These trusts can be very elegant solutions for estate planning, but if the trustee who takes them over either doesn’t know what he or she is doing or tries to do something that goes against the trust, you need a Sacramento Trust Litigation Attorney to assert your rights and ensure that the wishes of the grantor are carried out.

If you have specific questions regarding a trust, whether you are thinking about setting one up, have recently been asked to serve as trustee of one, or are a beneficiary who has questions about your rights, contact a Sacramento trusts and estates lawyer for a free consultation regarding your specific circumstances. Contact the Law Office of Bowman and Associates today at (916) 923-2800 and we will help you understand your situation and the options available to you.

This is the threshold question for many people contemplating a will or trust contest – can I contest the will or trust, and if so, how?

Standing

First, you must be a person who has standing before the court to bring a contest.  Generally speaking, you must be either a person who takes something under the will or trust or someone who would take something from the estate were it not for the will or trust.

A hypothetical may be helpful to clarify what I mean. Suppose that your mother died, she had no living spouse, her only children are you and your brother.  She left behind a will that leaves all of her estate to your brother but nothing to you. You had never heard of such an estate plan and are understandably shocked. You would have clear standing in this instance. Your mother had no spouse. Her only descendants are her two children, one of whom received everything and one of whom received nothing. If there had been no will, you and your brother would have taken equal shares, but because of the will, he takes everything.

Grounds

An entirely separate issue is the grounds upon which the will or trust is contested. There are numerous grounds, under California law to challenge a will or trust. These include: 1) lack of capacity, 2) undue influence, 3) fraud, 4) duress or menace, 5) mistake, and 6) certain provisions can be stricken if they make gifts to drafters of the will or other disqualified persons.

Lack of capacity refers to a lack of mental faculties on the part of the person who signed the will or trust. The probate court will focus only on the mental capacity of the deceased at the time the document was signed. Could the deceased understand what he or she was signing, did he or she in fact understand what was being signed, and did he or she intend to sign it?

Undue influence alleges that someone who benefits under the will pressured the deceased into signing the will for his or her own personal benefit.  There are a variety of ways to show this. In the example above, if you could show that your brother had taken your mother to an estate planning attorney that was a friend of your brother’s and the three of them sat down together and came up with an estate plan which benefited your brother and cut you out completely, that would be pretty strong evidence of undue influence. Such a case would be even more clear if the influenced was outside of the ‘natural’ heirs and yet received more than the relatives of the deceased.

Fraud requires the same showing as in a case for contract fraud. The deceased must have relied on a misrepresentation made by someone else and changed her estate plan on the basis of that misrepresentation.

Duress or menace is similar to undue influence, except it requires that the deceased was confined, harassed, oppressed, or that someone close to the deceased was so treated and the deceased made or changed his or her estate plan to escape the duress or menace.

Mistake more commonly applies to a trust than a will, the rules are somewhat different. In a trust setting, a substantial mistake of law and fact in the making of the trust can be sufficient to have it set aside. For a will, the mistake must go to the execution or the ‘formation of testamentary intent,’ meaning that the deceased must have signed or drafted the will believing it to be something else.

Sometimes gifts or provisions in wills can be set aside if they go to the person who drafted the will or trust, a person related by blood or marriage to the drafter, an employee of the drafter, a business that the drafter has an ownership interest in, or a care custodian of the dependent adult who made the gift.  There are other examples but these are some of the most common.

Once you have standing and grounds to contest a will or trust comes the question of how to do it.  The short answer is: go get a lawyer. These contests can be very complicated, very emotional, and very hard to navigate on your own.

If you have specific questions regarding a will or trust in your life, contact a Sacramento trusts and estates lawyer for a free consultation regarding your specific circumstances. Contact the Law Office of Bowman and Associates today at (916) 923-2800 and we will help you understand the details of and options available to your specific situation.

A common question posed by clients who are dealing with a trust for the first time, is what is the difference between a revocable and irrevocable trust?  The short answer is that a revocable trust can be disbanded at any time by the person who established it, whereas an irrevocable trust cannot. Most commonly, when we’re speaking of trusts as a tool to pass wealth along to future generations, the distinction hinges on how the trust is designated in the creation documents.

As I’ve mentioned before, estate planners like to use trusts as tools to keep their clients’ assets out of probate court. While there are no guarantees, this is generally pretty effective. A relatively common method for establishing a trust to accomplish this is to establish a revocable trust for the benefit of the grantor (the person who contributes assets to the trust) during his or her lifetime and then, upon the death of the grantor, the trust becomes irrevocable and benefits a carefully designated group of beneficiaries.

Usually, these instruments are crafted so that if I put all of my assets into a trust, I can still do what I want with them up until I pass away. Then, upon my death, the trust would become irrevocable, and the instrument would name a trustee to be in charge of distributing its assets, per my wishes, to beneficiaries I have named. In this way, probate isn’t necessary, I essentially die with no assets of my own, everything belongs to the trust, and the trust contains very specific instructions for what is to happen upon my death. Further, once I die, the trust becomes irrevocable, so the trustee is duty bound to do no more than protect my assets and distribute them per my wishes.

If you have specific questions regarding a trust in your life, contact a Sacramento trusts and estates lawyer for a free consultation regarding your specific circumstances. Contact the Law Office of Bowman and Associates today at (916) 923-2800 and we will help you understand the details and options of your specific situation.

It’s pretty common knowledge that we are slowly recovering from one of the worst economic periods since the Great Depression. The collapse of the housing bubble and the ensuing meltdown of financial systems everywhere continue to be analyzed, but it’s pretty well documented. Let’s say a close relative passes away and leaves you in charge of a trust and the main asset is real estate. What should you do?

Real estate values are at historic lows in many areas and a Trustee has an absolute duty to the beneficiaries (and all of them equally) to do what is in their best interests. Is it in the best interests of the beneficiaries to hold the property until values rebound? How long will that be? Is it a better idea to sell as quickly as possible and get the money to the beneficiaries with no delay?

Both possibilities have their problems. Holding assets in a trust, when that trust is intended as an instrument to transfer wealth between generations without going through probate proceedings, is always a dangerous proposition. You end up with restless beneficiaries who will start asking, ‘if he died a year ago, why haven’t we gotten our inheritances yet?’ Those beneficiaries may go consult lawyers and try to push the proceedings along. They may bring a legal action, second guessing the judgment of the trustee. They may even try to have the trustee removed for mismanaging the assets. If not defended aggressively, these actions by beneficiaries can subject trustees to losing their position as trustee and being held personally liable for any money that the trust lost while it was in their control.

On the other hand, quickly liquidating the real estate and distributing the money can cause similar problems. Market values for real estate are at historic lows right now in many areas. However values look now, odds are, they will look better in a couple years. Selling now, if there is no express requirement to do so in the trust, could also subject the trustee to liability for devaluing the trust.

These two choices create a classic Catch-22 scenario. Sell, and the beneficiaries could sue for selling too low; hold, and the beneficiaries could sue for unreasonable delay or mismanagement. This is a complicated problem that has become all too common in the last couple of years. The best way to proceed depends on your circumstances, the needs of the beneficiaries, and their relationship with the trustee.

The only universal advice if you find yourself in such a situation, as a trustee or a beneficiary, is to contact a Sacramento trusts and estates lawyer for a free consultation regarding your specific circumstances. Contact the Law Office of Bowman and Associates today at (916) 923-2800 to arrange a free consultation regarding your specific situation.

A common clause found in almost all trusts and wills in one form or another is a ‘no-contest clause.’ Generally speaking, these clauses provide that if any beneficiary brings a legal action to contest the will or trust, they will be disinherited, or their inheritance will be substantially reduced. While of course there is no foolproof way to reach back from beyond the grave and ensure that no one will fight over your estate, a no contest clause is generally a pretty effective deterrent among beneficiaries that you’ve named. They aren’t, generally speaking, a deterrent for people who wouldn’t stand to inherit anything anyway, as they’ve got no inheritance to lose.

Traditionally, no-contest clauses have been enforced unless some element of the will or trust scheme violates public policy and a contest is brought to challenge that element. The enforceability of no contest clauses has, over the years, produced a dramatic rise in requests for ‘safe harbor’ rulings. A ‘safe harbor’ ruling, just means that a court, before you officially contest a will or trust with a no contest clause in it, will give you its opinion on whether or not the contest you are proposing will violate the no contest clause of the will or trust.

Sound confusing? It is. A ‘safe harbor’ ruling is basically an advisory ruling indicating that if you were to bring a contest to the will or trust, you will not lose your inheritance. Generally, the safe approach if you want to contest a will or trust and the will or trust has a no-contest clause that applies to you, is to petition the court for a ‘safe harbor’ ruling. If you get that ruling, it means that you can bring your contest without fear of being disinherited for bringing the contest. If the court doesn’t find ‘safe harbor’ you can still bring your contest, but the no-contest clause will be enforced and unless you prevail in your contest, you will probably lose all or most of your inheritance.

The law regarding no-contest clauses and there enforceability has changed over the last few years and the changes are significant. In 2008, the California Law Revision Commission issued a report that essentially found that safe harbor rulings were wasting a great amount of judicial resources and made two primary recommendations: 1) reject the old rule (that no-contest clauses should be enforced unless the provisions of the will or trust violate public policy) and 2) adopt a new rule that all no-contest clauses should be unenforceable, except for three specific types of contests:

• Direct contests brought without probable cause (challenging the will or trust itself on grounds like forgery, lack of capacity, undue influence, etc.),
• Challenges to certain property transfers if expressly barred by the no-contest clause, and
• Filing or prosecution of creditor’s claims if expressly barred by the no-contest clause.

The legislature adopted these recommendations almost entirely. Beginning January 1, 2010, applying to all wills and trusts that became irrevocable on or after January 1, 2001, no-contest clauses will only be valid against the above three categories of contests.

The first category of enforceable no-contest clauses is the most radical change. Now, rather than having a ‘safe harbor’ hearing to determine if a contestant will be disinherited, the contestant must evaluate whether or not he or she has probable cause to believe that the will or trust is invalid. If the contestant doesn’t have probable cause, but proceeds anyway, on a hunch, or a possibility, the contestant may lose all or most of his inheritance. How probable cause will be interpreted in this context is somewhat unclear.

Despite the California Law Revision Commission’s recommendations for safe harbor hearings in limited circumstances, the legislature did away with safe harbor hearings completely in the 2010 revisions. It is now more important than ever to have the advice of a skilled trust lawyer before bringing a will or trust contest. If your grounds for contest can’t clear the probable cause threshold, you could lose your entire inheritance with no warning.

If you would like to bring a will or trust contest but are unclear about how the new laws may affect you or have other questions about an ongoing will or trust situation, contact a skilled will and trust lawyer in Sacramento at the Law Office of Bowman and Associates today at (916) 923-2800 for a free consultation regarding your specific situation.