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Sacramento Estate Planning Attorney

Sacramento Estate Planning Blog

Unique situations that require adept estate planning

No two families are the same. Some families may appear "traditional," with two spouses remaining married for the long-term and raising children, while others are "untraditional." These latter families can involve step-parents and step-children, unmarried couples, families with adopted children and even children conceived through artificial means. Regardless of the dynamics of a family, estate planning is crucial.

Yet, those who have a complex family structure may need to give their estate plan more care. Failing to address what may seem like minor details may lead to loved ones missing out on intended inheritances. For example, a step-parent may need to be abundantly clear in their will and trust documents whether they are leaving assets to their step-children. The law otherwise doesn't necessarily allow for those children to inherit from a step-parent.

No mental incapacitation found in mogul's estate plan case

Estate plans can address significant wealth. When familial tensions run high, these plans can run into conflict, with multiple parties claiming that they should have their fair share of an estate's assets. Those who are not prepared to head off these disputes can have their estates distributed in a way that is in opposition to their wishes.

This was almost the case for media mogul Summer Redstone. Redstone, who is 95, recently found himself embroiled in litigation regarding amendments he made to his trust that removed his former companion as the person in control of his healthcare directive. It also kicked her out of Redstone's mansion. The dispute started when the former companion claimed that Redstone lacked the mental capacity to make these changes. That companion has now agreed to repay more than $3 million in gifts that were given to her.

Estate planning: consider utilizing accounts in trust

We've spent quite a bit of time on this blog discussing various types of trusts. These estate planning vehicles can serve an important purpose. They can allow an individual to leave assets to others with certain restrictions applied. There are oftentimes tax advantages to utilizing a trust, too. In order to pick the trust types that are right for an individual in his or her situation, it is important to carefully consider the options.

One option available to Californians is the account in trust. Here, an account is placed in trust, meaning that it will be managed by a designated trustee for the benefit of another. As with other trusts, terms and restrictions may be placed on the trust and the dispersal of assets from the trust. A variety of assets can be placed in an account in trust. Stocks, bonds, mutual funds, even real estate can be placed in an account in trust.

Remarriage can affect estate planning and distribution

It's no secret that divorce is a common occurrence in California and throughout the country. So, too, is remarriage after divorce. While statistics show that less than one out of every five divorced individuals remarry, the rate is significantly higher for those 55 and older. For this population, remarriage occurs 57 percent of the time.

Remarrying after a divorce can bring about a lot of changes. Of course, emotionally, an individual has fallen in love with someone else and decided to share his or her life with that person and, in many instances, his or her family. Things can change logistically, too. Parenting time with kids from a previous marriage, adapting to new routines with stepchildren and generally getting acclimated to the ins and outs of daily life can be an adjustment. While most people are able to recognize these changes, many of these individuals neglect to identify the ways that remarriage after divorce can affect their estate and how it will be distributed upon their passing.

Transfer on death accounts can help avoid probate

Most, if not all, Californians want to avoid the probate process. After all, having an estate subjected to probate can make the matter public, and it is usually lengthy and costly. For these reasons, many people who engage in estate planning do so, at least in part, to avoid probate. In order to do this successfully, though, Californians need to understand the estate planning options available to them, choose those legal avenues that are right for them, and create legally valid documents that will withstand any challenges.

One action that can be helpful in one's pursuit to avoid probate is to utilize transfer on death accounts. Accounts that contain a transfer on death provision remain held by the account's creator until the time of his or her death. At that time, the assets subjected to the transfer on death provision are diverted to named beneficiaries. This completely bypasses the probate process.

What is a blind trust?

There are a variety of trusts that can be utilized to fulfill the needs of an estate planner. Previous posts here have discussed a number of options, including irrevocable trusts in general, charitable trusts and generation-skipping trusts. There is another option: a blind trust.

This type of trust allows trustees to possess full discretion in the handling of trust assets. The beneficiaries of the trust, as well as the trust's creator, have no knowledge about how those assets are handled. The trust's creator can terminate the trust, but he or she will receive no reports from the trust and its investments, if any.

Considering trusts? Get the right information first

A recent post here discussed the generation-skipping trust and how it may be beneficial to those engaging in the estate planning process. This is just one of the many trust types available to those who create estate plans. Each trust type has its own benefit, and one or a combination of a number of trusts can help bring a vision for an estate plan into reality.

With that being said, trusts and other estate planning documents need to be crafted with attention to detail and an eye for clarity. Estate planning vehicles that are ambiguous, vague or fail to address all assets can leave the matters open for interpretation. This is the death knell for an estate plan. It can cause familial strife and, in some instances, litigation. It can be costly and lead to outcomes that are counter to an estate planner's wishes.

What are the duties of the executor of a will?

Our readers who are familiar with the estate planning process know that there are many decisions that must be made. An individual must determine to whom assets will be left and what restrictions, if any, will be placed on the distribution of those assets. Even long-term care and powers of attorney may be important considerations during the estate planning process. Another important consideration, especially when creating a will, is who will serve as the will's executor.

The executor of a will has many duties. When looking at the broader picture, an executor assumes the legal responsibility of a deceased individual's financial affairs. The purpose of doing this is to wind down an estate. Therefore, an executor will be tasked with paying off debts, including outstanding bills and taxes, as well as distributing assets in accordance with the terms of a will. A will executor is also required to appear in court to inform a judge about the progress being made in winding down an estate.

What is the generation-skipping trust?

As we have discussed previously on this blog, there are many estate planning vehicles that can be utilized to dictate how an individual's assets will be distributed upon his or her death. While wills are quite common, trusts can, in some instances, be much more effective when used in combination with a will. There are a wide variety of trust types available to estate planners, each serving its own purposes and carrying its own benefits. Knowing the ins and outs of each trust is critical to developing a holistic and effective estate plan.

One type of trust that an individual may consider is the generation-skipping trust. Here, as its name implies, assets are placed into a trust for the purpose of passing them down to an individual's grandchildren, rather than his or her children. With that being said, the generation-skipping trust does not have to name a blood relative as the beneficiary. Instead, the beneficiary only needs to be 37 1/2 years younger than the individual who created the trust.

Estate planning and the qualified disclaimer

The recent passing of former President, George H. W. Bush, has left many Californians heartbroken. One reason is because he appeared to suffer from what some call the "broken heart syndrome." This is because former President Bush passed away just a mere eight months after his wife Barbara Bush. As sad as these types of events can be, it can also be informative, especially when looking at estate planning. After all, many families find themselves in a position where a couple, or two parents, pass away in relatively quick succession.

So, how should assets be handled in these situations? It depends on the facts at hand. However, one option is for spouses to create a qualified disclaimer as part of their estate plan. A qualified disclaimer is a written and signed statement whereby an individual essentially refuses to accept any gift from another, including an inheritance. So, if one spouse passes away and leaves assets to his or her spouse, and that spouse has a qualified disclaimer, then the assets will not pass to the second spouse. Instead, they will proceed down the succession chain to the couple's children or other qualified beneficiaries.

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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