Tag Archives: Trust

Selecting the Right Trustee

A typical misconception about estate planning is that people who are considered older should be concerned with them and that there is always time to go and create a will or trust. The problem with that thought process is that estate plans are much more than the passing of assets to another person. Estate plans can include the power to make decisions for a person regarding health concerns if said person is incapacitated or is unable voice the decision themselves. This is typically an overlooked aspect of estate planning and actually is a very important one in the case of a car accident or maybe a work related injury. Some may argue that one can go make the health care power of attorney if something was to happen, but may forget that if a person is incapacitated they will not be able to create this document. In addition, if an emergency is to occur, it is normal to be in a frazzled state and not think things through clearly before making important documents. Because of these mentioned reasons, it is a very important decision to set up a very precise health care power of attorney and make sure that your health and life is protected in case of an emergency.

The other side of estate planning that younger individuals do not typically think about are wills and trusts to protect the assets that they have. Homes, bank accounts, automobiles, burial expenses are the items people correlate to wills and trusts, but social media accounts and smaller personal belongings is what is left out of that thought process. They may seem minuscule and unimportant, but should be taken care of to make sure that they go into the correct hands. Everything of slight importance could be and should be mentioned in a will so that nothing is left to chance. Also, younger people without a great deal of assets tend to believe that their assets will always be placed in the hands of their spouse or maybe parents, which ends up not being true. It is always beneficial to have a will or trust set up, even for a small amount of assets, so that the assets are distributed to the correct people and survivors do not have to go through a tedious process which occurs when there is no estate plan. In addition, assets that have been obtained after the will or trust has been established can always be added to the documents, so that they are protected as well.

A very important aspect of estate planning that usually is not mentioned in articles is the actual picking of the trustee and how to make sure you have chosen the correct person. The questions that should be asked to picking a trustee are as follows:

–         Does he or she have the experience and knowledge to manage complicated financial affairs in a competent and knowledgeable manner?

–         If he or she must make a decision that may affect family members, will they act in a fair and unbiased manner?

–         Will naming a family member as trustee create tension between family members?

–         Does the prospective trustee have the time to manage your trust and will do so without rushing?

–         Does he or she want this important responsibility?

–         Is there another person in mind to serve as trustee if the trustee selected can’t do it?

These questions should be thought about with the uttermost care and should be discussed with a third party to get a second opinion on the potential choice of the trustee. An attorney could help make the correct choice of a trustee because they would be unbiased. Please contact attorney Anthony Marinaccio at 818-839-5220 with any questions.

Dying without a Will in California

If a resident of California passes away without having an executing a will or revocable living trust, California has an entire set of laws in the Probate Code, known as “intestacy” to determine who will get your estate. The intestate laws have a series of questions to be answered do determine who can inherit the estate.

Whether or not the person is married is the first major question.

Persons Not Married At Death (Includes Single Persons, Divorced Persons, and Widows/Widowers)

If the person was not married the estate is inherited as follows:

1. If there were children in the same generation, they take equal shares of the estate.

2. If there were no children, grandchildren, great-grandchildren, etc; then the estate will be inherited by the parents of the deceased.

3. If the deceased does not have any living parents then the estate is given to the brothers or sisters of the deceased. If the brothers or sisters have passed away and had an “issue,” the issue will be able to inherit whatever amount would have been inherited if the brother or sister had been alive.

4. If there are no brothers or sisters the grandparents shall inherit the estate of the deceased.

5. If there are no living grandparents, the issue of the grandparents shall inherit the estate. This may entail the deceased aunts or uncles, and if there are no aunts or uncles then the decedent’s cousins may be entitled to the estate.

6. If there are no cousins then according to the Probate Code 6402, the estate shall be given to the next of kin in equal degree.

Persons Who Are Married At Death

If the person was married at death, then there are two sets of questions to ask to determine who will get that person’s estate.

First, the main question is whether the deceased owned community property, separate property or a mix of both types of property. A simple definition of community property is the assets and earnings that the deceased had earned during the time of the marriage and the separate property is the assets that were brought into the marriage in the beginning.  California has very diverse definitions of these and separate property and community properties may be intertwined and mixed together to provide some benefits. The following are the steps and rules that are to be followed;

1. The community property of the deceased shall go to the spouse, once a spousal property petition is established.

2. The separate property of the deceased shall be distributed as follows;

A. The spouse is entitled to the separate property if the deceased is not survived by parents, brothers or sisters, or children of a brother or sister that have passed away.

B. The spouse is entitled to half of the separate property if the deceased had only one child or had an issue of a child that had passed away.

C. The spouse is entitled to half of the separate property if the deceased had left no issue, but had left parents or an issue of the parents.

D. The spouse is entitled to one third of the separate property if the deceased had left more than one child.

E. The spouse is entitled to one third of the separate property if the deceased had left one child and the issue of one or more children.

F. The spouse is entitled to one third of the separate property if the deceased had left two or more issues of children.

These are the default rules if you do not have a will or revocable living trust in place. The intestacy laws show how important a will can be if you want your estate to go to people who are not listed in article (i.e., non-spouses, friends, distant relatives). Please contact Attorney Anthony Marinaccio at 818-839-5220 for more information.

Estate Planning for Childless Couples

The Wall Street Journal recently had an article entitled “Estate Planning for Childless Couples” that emphasizes the importance of different estate planning tools for your personal situation. I often tell people who do not have children that estate planning may have even more important repercussions for them than people with children because if you die without a will, the State of California decides who will inherit your estate through intestacy laws.

If you die without a will, you are said to have died “intestate.” The Probate Code sets forth who would receive your estate. If you die without a will only family members will be able to inherit (even long lost ones). Therefore, it is sometimes more important for persons without children to have an estate plan.

The Wall Street Journal article highlights why having a plan is important particularly if you want to leave your estate to close friends or a charity. Both categories would not receive anything if you die without a will. It would also be important to create a revocable living trust for the same reasons anyone should – namely to avoid probate.

It is also very important for childless couples to address a power of attorney and advanced healthcare directive because without one, decisions that need to be made if you are incapacitated will most likely be left to strangers.

For these reasons a couple that does not have any children should address all of these issues in their estate plan. Attorney Anthony Marinaccio can properly advise you for your particular situation if you have any questions or concerns. Please contact him at (818) 839-5220. 

Memorial Day Weekend Discounts

For Memorial Day, Marinaccio Law is offering a 10% discount on all estate planning services for current U.S. military, U.S. military veterans, and law enforcement. Marinaccio Law offers a variety of services for estate planning, including drafting revocable living trusts, wills, advanced healthcare directives, and powers of attorney. This discount is good through May 30, 2014.

Please contact Attorney Anthony Marinaccio at (818) 839-5220 for more information.

Probate, Inheritances, and Property Taxes

The title to the article sums up USA Today’s article Divorce, Death, and Donald Sterling’s Boyhood HomeThe article describes several properties in Boyle Heights still owned by Donald Sterling’s deceased mother and grandmother.

In California, property taxes are determined by “assessed value,” which is derived from the fair market value of a property at the time it changes ownership. For example, a property purchased in the 1970s will have a low assessed value because it was purchased at a lower price than it would receive today.

If you sell a property, it will get reassessed, but there are often questions whether a property will be reassessed if you want to leave the property to your children, grandchildren, other relatives, or friends.

Generally, a transfer from a parent to a child does not trigger a reassessment. There is no limit to transfers of a primary residence; however, there is a $1 million limit to other properties. A transfer can be the result of a gift, a sale, or an inheritance. It can also be through a trust.

A child for purposes of the property tax exclusion includes:

  • Any child born of the parent(s)
  • Any stepchild while the relationship of stepparent and stepchild exists.
  • Any son-in-law or daughter-in-law of the parent(s)
  • Any adopted child who was adopted before the age of 18

Further, a grandchild could be considered a “child” for purposes of a property tax exclusion if the child of the transferor has died along with the spouse of that child.

The California Board of Equalization has an FAQ’s that provides a lot of information regarding the parent-child exclusion for the property tax.

Important Estate Planning Questions for Spouses

Dailyfinance.com has an interesting article entitled 3 Important Estate Planning Questions which provides three questions that are important for all spouses to discuss when drafting an estate plan.

The first question, “How well does my spouse know our financial advisor?” is a good question to discuss how both spouses should know their “estate planning” team. Although the article limits itself to a financial advisor, the same could be said for a couple’s estate planning attorney and other important persons who may be in charge of finances for a couple.

The second question, “Does my spouse know where all our accounts are and how to access them?” is also a very important discussion to have. Particularly in the era of online accounts and e-mail notifications of statements, it is important to have a depository of accounts and login information. After one spouse’s death, there can be confusion as to where accounts are, the amounts in those accounts, and whether there are additional accounts. This may be particularly important if there are living expenses that still need to be paid for in addition to funeral and burial costs.

Finally, “Are our wills and beneficiary designations up to date?” This question has important estate planning repercussions. It is somewhat common to forget that estate planning can be more of a process and not a one time event. Grandchildren are born, executors die, property gets moved around, and accounts change. These issues can all be important. It is also important to not just think of your will as your estate plan, but also beneficiary designations on accounts. For example, a 401(k) account has a beneficiary designation that you must designate.

These important questions are vital to an estate plan being executed smoothly or whether there would be confusion after a death. A consultation with an estate planning attorney can be an important step in getting an estate plan completed or updating it.

Why Hiring an Attorney Can Save You Money on Your Estate Plan

Forbes has an interesting article, Careful, Thoughtful Drafting Essential in Estate PlanningIt provides an interesting glimpse into do-it-yourself estate plans with the advice of an attorney.

In California, a person can draft their own will in their own handwriting and can even draft a “statutory will” that is a fill-in-the blanks will (there are certain rules and exceptions to drafting your own wills). However, the advice of an attorney can be essential in drafting important documents to ensure property gets passed on properly to the people you want.

If a will is found to be invalid, California’ intestacy laws will apply, which may go against your original wishes. The article highlights the issue of leaving a blank on a form will and how it can cause a large problem. In this case, an heir died prior to the will drafter causing a dispute between the deceased’s brother and her nieces from another brother. There was also an issue of a handwritten codicil, or amendment to a will.

If the parties had spoken to an attorney when drafting their estate planning documents, they could have saved money and time that occurred during the legal dispute to determine who would receive the estate. The article highlights why spending a little money upfront can save significant legal bills in the future.

Painless Estate Planning

CNN has a great article entitled “10 Steps to Painless Estate Planning” which discusses many of the issues I have discussed in past blog posts. It highlights the importance of having a written estate plan, including a will and a revocable living trust, amending these documents when necessary, and creating a power of attorney and advance healthcare directive.

If you have questions regarding drafting your estate plan, amending your estate plan, or to initiate a probate or trust administration, please contact Attorney Anthony Marinaccio at (818) 839-5220.

Mistakes in Philip Seymour Hoffman’s Estate Planning

Celebrity deaths are often followed by a very public battle between heirs over the celebrity’s assets, fame, and residual income. This CNBC article entitled “Here’s Why Philip Seymour Hoffman’s Will is a ‘Mess’” helps others not make the same mistakes.

Mistake Number 1

Hoffman’s will is over a decade old. Wills should be changing documents because life changes. After major life changes, a will and your entire estate plan, should be reviewed to determine if any changes are necessary. Hoffman’s will left his estate to his long time girlfriend and mother of his children, Marianne O’Donnell.

Hoffman’s will may only mention his one daughter that was born at the time. After he wrote his will, he had two additional children. In California, a child born after a parent’s will is executed is entitled to the child’s intestate share; however, there are exceptions and this statutory provision should not be relied upon to allow all your children to inherit your estate.

This was probably the biggest mistake in Hoffman’s estate planning because it will create uncertainty and could create a battle between siblings for their shares of Hoffman’s estate.

Mistake Number 2

Hoffman’s estate plan did not take into account estate and other taxes. Because he left the bulk of his estate to his girlfriend, she will still need to pay estate taxes. If the couple were married, she could have inherited his estate tax free. The number is huge . . . O’Donnell may need to pay up to $11.9 million of a $35 million estate, nearly 1/3 of the estate!

There could have been a few ways to avoid the large estate tax bill, including creating trusts for his girlfriend or purchasing a life insurance policy to help pay for the estate tax bill. However, perhaps the best way to avoid the large estate tax bill would have been for the couple to have been married.

Mistake Number 3

Hoffman created a trust for his one child (the one born before he wrote his will). The trust gives all assets to the child when the child turns 30. Because of the size of Hoffman’s estate, it may have been better to keep the trust and not provide an outright gift of all assets at a certain age because upon 30, Hoffman’s estate to his child will not be protected from creditors, liens, judgments, or ex-spouses. It is important to note that are ways to create trusts for beneficiaries in order for them to be protected from creditors or reckless spending.

Although Hoffman had an estate plan unlike some other famous celebrities who have recently died, the fact that it had not been updated in ten years makes it problematic for several reasons along with the huge estate tax bill that will now be owed.

When to Change the Names of Beneficiaries on Accounts

This interesting article on Marketwatch entitled Don’t Make the No. 1 Estate Planning Goof  offers an interesting insight into making sure that you change the names of beneficiaries to accounts that are payable upon death. Examples of such accounts include most retirement accounts (401(k)s, Roth IRAs, IRAs), life insurance policies, some mutual funds, life insurance, certain bank accounts, 529 college savings accounts, and certain brokerage accounts. If you die and you have not changed the names of beneficiaries, your assets could go to people you did not intend.

In addition to naming a primary beneficiary to these accounts, many accounts also allow you to name a secondary or “back up” beneficiary in the case the primary beneficiary dies before you.

Generally, any time you face a major life change you should consider changing the names of beneficiaries to accounts. For example, upon a marriage or a divorce, a new spouse could be added as beneficiary, and an ex-spouse will generally be removed.

There are also certain situations such as if you want to make minor children a beneficiary or a disabled person receiving government assistance a beneficiary that you may need a little more than simply naming a beneficiary because you may need to open a trust for them to receive the asset.

Accounts that would not fall within probate or your revocable living trust should also be considered as part of your estate plan. Please contact Attorney Anthony Marinaccio at (818) 839-5220 to set up a free initial consultation.