Archives for September 2017

Should I be scared of probate?

September 26, 2017 By Marissa Sirota

Handling a loved one’s death can be an extremely trying experience for any family. However, some individuals in California put more stress on themselves than is strictly necessary by worrying over a common process — probate. While avoiding probate is a common goal of many estate plans, the process can be incredibly useful.

Fear around probate likely extends from not understanding what the process is. At its most basic, probate is the legal process in which, upon a person’s death, their property is transferred. Not all property is subject to probate. Life insurance policies or bank accounts designated as payable on death are not required to pass through the process, which is passed on either by ownership or designation. Gifts, revocable trusts and joint ownership with survivorship rights also skirt probate.

Otherwise, property owned at the time of a person’s death will be included in the probate process. However, before it can be distributed, all the probate property must be collected and any remaining debts, taxes or claims must be paid first. Afterwards, income owed to the estate — including rent and other debts owed — is collected. If there are no disputes regarding the will, the property may then be distributed to named heirs.

Probate is often painted in the light of feuding heirs fighting it out over minor details in a will. While there is a purpose for some disputes, many probate processes in California are completed without any significant issues. Careful estate planning can be used to simplify and ease the probate process for future heirs.

Source: FindLaw, “The Probate Basics“, Accessed on Sept. 24, 2017

Challenging a will is only possible in specific cases

September 25, 2017 By Marissa Sirota

When a person takes the time to create an estate plan, he or she will usually assume that people will accept the will and other portions of the plan. There are some cases in which wills can be challenged and these reasons are very specific.

Laws make it difficult to impossible for people who don’t have an interest in the will to make a claim that would prevent the rightful heirs from being able to get what they are due. Whether you are thinking of challenging a will or you are the person who has to deal with the will contest, here are some points to remember.

Only qualified individuals can challenge a will

One of the first things to remember is that the person who is going to challenge the will has to be qualified to do this. Typically, anyone who would be entitled to a piece of the estate if the person died without a will is a person who can challenge the current will. There are some cases in which a person who was named in a previous will might be able to contest the will.

The reason for the challenge has to meet applicable criteria

Even if a person is qualified to challenge a will, one’s claims for the challenge must meet applicable criteria. This means that individuals can’t file a challenge based solely on the fact that they aren’t getting what they want. Typically, there have to be claims based on reasons why the will shouldn’t be valid. For example, showing the court that a person created the will under duress or undue outside influence would meet this criteria. Fraud, forgery and claims regarding the value of the estate can also be used to challenge a will. The presence of a more recent will is another possibility.

Potential drawback to challenging a will

Some wills have clauses that will set a penalty for contesting it. This no-contest clause will usually revoke a person’s entire share of the estate if he or she contests the will unsuccessfully. While this might seem harsh, it is a way that people can try to ensure that the terms of the will are complied with.

A will contest isn’t something that should be taken lightly. These cases can rip families apart, so anyone considering this path must think carefully before they proceed. If you decide to go ahead with the challenge, your next step should be determining if your case meets the requirements.

Continuous estate planning important for accuracy

September 19, 2017 By Marissa Sirota

A proper estate plan requires the right ingredients. Attention to detail, an understanding of the importance of a will and open communication with heirs are all essential steps of creating a successful plan. Unfortunately, there is one important part of estate planning that many people in California forget about — updating.

Wills, living wills and even trusts are not necessarily set-it-and-forget it forms that can be checked off of a to-do list and then forgotten about. This is especially true for those who have significant assets and business interests. When these types of interests are structured in such a manner where multiple jurisdictions might be involved, careful wording and small tweaks are often needed over time; otherwise changes in both law or business holdings could be adversely affected.

Despite how important it is to protect these types of assets and interests even after death, few fail to take the necessary steps. One estimate claims that when it comes to business owners, only nine out of 10 have an estate plan that is younger than five years. This could mean that upon their death, these business owners who have been highly successful in life might have their estate handled in a manner that does not align with their current wishes.

Discussing end-of-life plans can be understandably uncomfortable for California residents, and most people are not eager to return to the subject more than once in their lifetime. However, failing to at least evaluate an estate plan on an annual basis can lead to complications during estate administration, including the possibility of some assets becoming tied up in the probate process. These types of issues can easily be avoided by treating estate planning as an ongoing process and updating important documents as necessary.

Source: Forbes, “Why Continuous Estate Planning Is Essential For The Rich And Super-Rich“, Russ Alan Prince, Sept. 6, 2017

The truth about trusts

September 15, 2017 By Marissa Sirota

There are a lot of misconceptions out there when it comes to certain estate planning documents. Trusts are a great example. Many California residents may not understand how they really work; therefore, they may be afraid to use them.

There are at least five common misconceptions about trusts. The first has to do with estate taxes. Many people tend to think that the only reason to set up a trust is so that estate taxes can be minimized or avoided. While this is a benefit to utilizing a trust, it is not the only reason to have one.

The second common misconception has to do with the size of an estate. Trusts are not just meant for the super wealthy. When it comes to trusts, it is not about the size of the estate. Instead, it is about making sure the estate is protected.

The third common misconception has to do with flexibility. By putting assets in a trust, some people believe it means that they no longer have full control or that they are unable to make changes. Depending on the type of trust created, this is not necessarily true.

Misconception number four has to do with naming a trustee. Naming the trustee can be a challenge. It is a job that should only go to a person who is prepared to handle the role. It does not have to go to a family member or friend, especially if the estate owner feels that he or she really has no one available who is ready to take on the responsibility.

Finally, misconception number five has to do with creditors. Some people mistakenly believe that if assets are placed in a trust, creditors can make no claims to them. This is not always true. It really depends on how the trust is created and worded.

Trusts seem simple enough to create. The truth is, though, they are complex legal documents that if not written properly may not offer the protections for which one is searching. An experienced estate planning attorney can assist California residents in creating trust documents that do offer the protections and flexibility they desire.

Source: wmur.com, “Money Matters: Five misconceptions about trusts“, Marc Hebert, Sept. 14, 2017

Achieve asset preservation through estate plan modification

September 8, 2017 By Marissa Sirota

After taking the time to put an estate plan in order, who really wants to think about it anymore? Most people do not. Unfortunately, it is hard to achieve asset preservation if one’s estate plan is not kept up to date. California residents can help themselves by reviewing and updating their estate planning documents on a fairly regular basis.

A lot can change in one’s life over the course of just a few years — particularly for successful business owners or members of well-to-do families. Unfortunately, according to studies, most individuals with estate plans have plans that are more than five years old. Why does that matter?

What is going to happen to all the assets accrued during those five years? What is going to happen if one’s estate plan says one thing, but one’s wishes have changed? Having an out-of-date estate plan matters because assets will not be fully protected, and one’s current wishes may not be honored.

Modifying an estate plan is actually a relatively easy thing to do. It is just a matter of taking the time to do it. Failing to do so will not help one’s asset preservation efforts. It also increases the odds of disgruntled family members filing claims against the estate. California residents can help their loved ones avoid a lot of problems down the line, simply by taking the time to meet with an experienced estate planning attorney in order to review their current estate plans and, if necessary, make any changes needed or desired.