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Sacramento Estate Planning Attorney

Sacramento Estate Planning Blog

The interplay of estate planning and prenuptial agreements

Those in California who engage in estate planning usually do so for the sole purpose of ensuring that their hard-earned assets are protected and preserved for those who they identify as their heirs and beneficiaries. As we have discussed at length on this blog, there are a number of ways to ensure that one's estate plan is thorough, legally valid and created in a way that allows for distribution of assets in accordance with one's wishes.

However, there are certain circumstances that can threaten an estate plan as initially drafted. One of these scenarios is when an adult child decides to get married. While a marriage may be something to celebrate, it does mean that divorce could loom in the future. Therefore, some parents try to talk their children into entering into prenuptial agreements.

Sacramento attorney with decades of experience handling trusts

Recently on the blog we discussed the blind trust. This type of trust is just one of the many trust options available to those who engage in estate planning. Fully understanding the benefits of each type of trust is critical to allowing an individual to make fully informed decisions with regard to what is best for them, their estate and their heirs.

Unfortunately, most people do not possess the knowledge or skills to adequately create the trusts they need to further their interests. Those who try to do so on their own may unintentionally leave gaps in their estate plan, which could lead to unwanted consequences including the loss of assets and a prolonged distribution process on account of the estate needing to go through probate.

The challenges associated with trust administration

When an individual in Sacramento passes away, the directions that he or she laid out in his or her estate plan kick into effect. Whether a will, trust or some combination of both is used in an estate plan, the administration of the estate and its trusts can be challenging. After all, trusts and other estate matters that are mishandled can result in the imposition of personal liability.

One key area to pay attention to is the payment of debts and distribution of trust assets. Generally speaking, an estate's debts should be paid before any money is paid out of the trust. This is because a trust administrator may have to personally pay for debts that the estate is unable to cover if beneficiaries and heirs have already received assets from the estate. Also, trusts typically allow for the payment of income, which is money earned through the investment of trust assets, to be paid at one time, while the principal of a trust is to be paid at another time with, perhaps, strict qualifications in place. This means that a trust administrator needs to be careful about how and when to pay out assets, as well as how to invest those assets.

Estate planning and the blind trust

We've spent a considerable amount of time on this blog discussing the various trust options available to Californians. Deciding on trust options that are right for you can be critical to the success of your estate plan, including the financial well-being of your heirs and the trust beneficiaries. This usually means that you and your heirs want to keep a close eye on how these trusts are managed, but sometimes that's not in your best interests. Sometimes, in fact, it might be wise to have absolutely no idea about how a trust is being managed.

In these instances, a blind trust may be worth consideration. As its name implies, a blind trust keeps the management of trust assets out of view of the trust's beneficiary. The main reason to do this is to avoid impressions of impropriety and self-dealing. Usually this comes up when people in power, including politicians and corporate executives, have the ability to implement changes that could would financially benefit themselves, but perhaps not the people or businesses they represent. These trusts can also be utilized by those who want to remain anonymous, such as lottery winners.

Steps to take to ensure an estate plan is effective

No one likes to think about their inevitable mortality. Therefore, it can take a lot of will power and bravery to create an estate plan. Those in California who are able to successfully create a plan may feel like they have achieved something major, which they have, at least to a certain extent. However, estate planning is never truly done. The legal documents through which an estate plan takes shape need revisiting from time-to-time, but even the process through which the plan is discussed with beneficiaries and heirs can have a significant impact on the plan's success.

Many individuals fail to discuss their estate plan with their heirs. In fact, one study found that nearly half of all parents fail to bring up the subject with their children, and only 28 percent of adults reported that they were aware of their parents' estate plan details. Another 40 percent reported that they felt that their parents' estate plans were unfair. By failing to discuss estate planning with their children and heirs, individuals risk that expectations may be dashed and feeling of unfairness may give rise to legal disputes.

Who is allowed to try to invalidate a will?

Wills can be powerful estate planning tools that can ensure that an individual's estate in California is distributed in accordance with his or her wishes upon death. However, in order for a will to be valid, certain legal requirements must be met. While the vast majority of wills meet these requirements, there are some instances when a wills validity can be called into question. However, when a will's legality is at issue, only certain parties can formally challenge it.

Generally speaking, only those parties who have an interest in the will are allowed to contest it. In short, this means those parties who would have something to gain from a change in a will or a ruling of invalidity can bring an action in court. Beneficiaries, for example, are able to challenge aspects of a will because they are named in the document and would thereby be affected by any such change. The same holds true to intestate heirs. In these situations, an intestate heir may challenge the legal sufficiency of a will, because he or she would stand to inherit more by proceeding through the probate process without a will.

Our Sacramento firm knows how to address intangible assets

Planning for your future can be a challenging endeavor. Planning for the future of your estate, then, can seem even more difficult. However, with proper guidance and some motivation, California residents can create an estate plan that works well for them and their loved ones. Assets can be protected, taxes and fees can be minimized or eliminated, and peace of mind can be obtained. Although this planning includes addressing physical assets such as one's home, bank accounts, retirement accounts and vehicles, it also often involves intangible assets, such as social media accounts, cryptocurrency, other digital accounts and even copyrights, trademarks and patents.

Dealing with these intangible assets can be critically important. Failing to properly address them could leave loved ones without access or, on the other hand, it may leave access available to those who the deceased did not want to access the assets. Therefore, those who are looking for a holistic approach to estate planning that adequately addresses physical assets, debts and intangible assets should turn to dedicated and trusted legal professionals.

Prince's estate unable to avoid probate, as the process continues

It's hard to believe that pop icon Prince passed away two years ago. Since his passing, his estate has been thrust to the forefront. One reason is because it is extremely valuable, estimated at $200 million. Another reason it has received so much attention is because Prince died without any sort of estate plan. There was no will, no trusts, no direction whatsoever as to how the estate's assets should be distributed.

This has created a lot of friction within the family, which likely has only been exacerbated by the probate process. Because Prince's estate was not subjected to a will, the matter must pass through probate to determine how the estate's assets should be distributed. Making matters more difficult in this case is the fact that the estate's executor and the federal government must first come to a consensus with regard to the estate's value before it can be divided amongst Prince's heirs. This has drawn the process out, costing the estate millions of dollars in management and legal fees while the family has yet to receive anything.

Adding property to a trust

Sacramento readers of this blog are familiar with the basic concepts of estate planning. They also likely recognize the important role that trusts can play in this planning process. Depending on one's unique set of circumstances, specific types of trusts can prove beneficial in furthering one's goals with regard to asset distribution upon death.

Deciding which types of trusts to create, if any, can be a challenging process. In fact, many individuals find themselves wondering about the nuts and bolts of it all. The first thought for many is a consideration of how assets are actually entered into a trust.

How to make modifications to a will

Taking even the most basic steps can be huge when it comes to estate planning. After all, this often means that an individual in California is prepared to confront the reality of his or her mortality with an eye on the futures of those he or she loves. While estate planning should occur early in an individual's life, it should also occur often. The accumulation of assets, the addition and loss of family members, and personal preferences can change over the years. Any of these changes may justify modification of an estate plan.

There are some significant life events that warrant revisiting a will, which can play an important role in any estate plan. Marriage, divorce, the birth of a child and the addition of stepchildren can all cause an individual to want to change his or her will. Another time when it might be wise to modify a will is when an individual takes on a new partner. If the couple is not legally married, and if they are not registered, then a surviving partner may be left with little, if anything, in the event of the other's passing. A will veers away from this default.

My Sacramento law practice, Michael A. Sawamura, Attorney at Law, focuses on wills, trusts and estate planning law in addition to business law and corporate defense services. My clients include professionals, government employees, small businesses, blue-collar workers and national corporations.

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