Sacramento Estate Planning Blog

Don't forget to address digital assets in estate plan

It wasn't that long ago that everything a person owned could be physically touched. Money, items of personal property, journals, and even photographs could be held in one's hand. Nowadays, though, much of our lives has be digitized. Thousands of dollars can change hands without ever touching paper money, and our most cherished memories are often stored somewhere online. While this convenience may make our lives easier, it can make estate planning trickier.

To start, most of these digital assets require secured login before they can be accessed. Those who fail to take this into account when planning their estate may leave their loved ones with no way access and manage those assets. This may mean that those assets, such as photographs and personal writings, will be forever deleted considering that many web-based services delete accounts after a certain period of time after an account-holder's death.

Estate planning and the pour-over will

Oftentimes, a will serves as the foundation of an estate plan. When a will is improperly drafted, an individual's estate may be in jeopardy. This is because a poorly created will can lead to ambiguity, challenges, a lengthy probate process and even an undesired distribution of assets. Therefore, Californians need to be diligent in their efforts to create their wills and update them regularly. Skilled legal professionals may be able to advise as to how best to utilize these estate planning tools.

One option is to use what is referred to as a "pour-over will." Although even a basic will typically dictates how assets will be passed on to heirs, a dated will can mean that certain assets are missed. In these instances, those unidentified assets may pass down in accordance with state law, which may not be in-line with a testator's wishes. Additionally, a testator may not have as much control over assets that are not placed in a trust. Assets that aren't place in a trust are not subjected to the trust's conditions, though. This is where a pour-over will can help.

The ancillary probate process and how to avoid it

Many Californians own significant property that they want to protect for their heirs and beneficiaries. Although these individuals may be familiar with estate planning and how it can be utilized to avoid the long, drawn-out probate process, they may not be aware of how assets that are owned out of state will be handled upon their passing.

Generally speaking, assets must be dealt with in the state where they are located. Therefore, a Californian who passes away and owns real estate in Arizona will have that out-of-state property subjected to Arizona's probate laws. This is called ancillary probate. Having to have assets probated in multiple states can be expensive and may result in a significant delay of estate assets. This is why it is critical that Californians who find themselves with this potential carefully consider their legal options.

Utilize trusts to protect wealth for your children

A common misconception amongst Californians is that estate planning is reserved for those who have reached the later stages of their lives. Although older individuals should ensure that their estate plans are suited to their wishes, younger people can and should utilize the estate planning tools at their disposal, too. Those who realize this often turn to a simple will to ensure that their bases are covered, but those who have children may be leaving their estate vulnerable by doing so.

Simply put, assets that are left to a minor child are inherited outright when they turn 18. On its face, this fact may not seem concerning, but when examined more closely, many 18-year-olds are simply unequipped to adequately manage inheritances. For these young people, an inheritance may seem like it is going to last longer than it actually will, thereby spurring them to spend recklessly.

Estate planning is crucial for those with serious illnesses

It's a scary reality that millions of Americans live with a chronic illness. In fact, some statistics indicate that more than 130 million people are affected by these conditions, and that number is only expected to grow for the foreseeable future.

Some of these individuals have diseases that will prove fatal, while others are fortunate enough to survive, but even those in the latter category can face significant health challenges and limitations. Although it may be difficult for these individuals to think about it, estate planning should be a priority.

Have confidence when drafting your will

On its face, estate planning can seem relatively easy, especially for those who just want to leave their assets to their spouse or children. For these individuals, a simple will may suffice to meet their needs, but even these documents can be fraught with legal issues. For an example of the complexities and confusion that can arise when a will is improperly handled, just read our recent post about Aretha Franklin's estate and her handwritten wills. To avoid potential problems related to the creation of a will, Californians should consider working closely with an estate planning professional.

There are many issues that can derail a will, and other estate planning vehicles, but a skilled attorney will know how to deal with those matters. He or she can help an individual take the steps necessary to diminish or eliminate claims of incapacity, coercion, and undue influence. Additionally, a legal professional can help ensure that a will is drafted in accordance with applicable laws, thereby ensuring its legal validity.

Proposed law may change how IRAs are handled in estate plans

For many Californians, their retirement accounts make up a significant part of their estate. Pension plans, 401(k)s, and IRAs are some of the major accounts. When properly addressed in an estate plan, Californians can rest assured that their assets will pass into the right hands upon their death. That may sound simple enough, but the process of estate planning can actually be quite complicated, especially when the law is in a state of flux.

This may soon be the situation for IRAs that are part of an estate plan. The SECURE Act, which is awaiting passage in the U.S. Senate, seeks to impose a number of limitations on how the funds contained within an IRA can be inherited. For example, many IRAs are paid out to beneficiaries over the life of that beneficiary. This extends the IRA tax benefits well beyond the life of the individual who created the account. Congress is looking to limit the withdrawal of these assets to within 10 years of an IRA creator's death, which would subject them to more taxation. If passed, it is likely that inheriting spouses will be exempted from this restriction.

A primer on the duties of the trustee

Laying out an estate plan is no easy feat. The challenges that often arise can come up in a variety of contexts, too. Those with blended families, young children, and a desire for asset distribution that is anything other than evenly divided amongst loved ones need to carefully consider how their estate plan is drafted to obtain desired results. While this may mean the creation of a will and a number of trusts, estate planning is about much more than just determining how one's assets will be distributed upon his or her death.

For example, when a trust is created, an individual can name another person to serve as the trustee. This individual has a fiduciary duty, meaning that he or she has a duty to act in the best interests of another. The trustee also holds title to assets that have been placed in the trust, making him or her responsible for how those assets are utilized. Oftentimes these assets need to be invested to maintain the trust's viability for as long as possible, which is why trustees are oftentimes better off if they consult with a financial expert.

Estate planning for children with special needs

Many California parents worry about their children's futures. This can be especially true when a child has special needs. These children often need additional support that is both emotional and financial in nature.

It can be difficult to think about a future where these children, even as adults, have to live without the love and support of their parents, but oftentimes that future becomes a reality. This is why individuals who have special needs children need to carefully consider how best to engage in estate planning so that their children are cared for as fully as possible when the time comes.

The importance of estate planning for intellectual property

Most people who think of estate planning only consider the transfer of tangible property upon death. Others may think about how debts play into the distribution of an estate, too. Yet, there are a whole host of other types of property that can carry tremendous value. Failing to appropriately address them in an estate plan, though, could mean that they wind up in the wrong hand.

Some of these intangible assets are intellectual property. Copyrights, trademarks, and patents can each be very valuable, and some may not even know that they have any of those properties until they sit down and think about it. A novel that is written, for example, has a copyright even if it hasn't been registered with the Library of Congress. This is considerable given that a copyright can last for the life of an author plus 70 years.

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