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Sacramento Estate Planning Attorney

Sacramento Estate Planning Blog

Now is the time to reevaluate your estate plan

As 2017 draws to its end and 2018 shines on the horizon, Californians may be starting to consider what resolutions they would like to work toward in the New Year. While some may desire to improve their health or get ahead at work, others may make plans to simplify their lives and focus their attention on family and friends. However, few many look far into the future to an eventuality that all people must face: their death.

That fact is, though, that every man and woman in the state will leave behind some amount of property or some type of assets when they pass on. And if they fail to create a sound estate plan that outlines where they want their assets to go and to whom the benefit of their wealth should flow, the laws of intestacy may impose their regulations and create bequests and inheritances that the deceased party never would have intended.

What is a special needs trust?

It is an unfortunate fact that some individuals struggle to care for themselves and to hold down jobs that provide them with necessary income. Often individuals in these difficult scenarios suffer from disabilities and are eligible to pursue financial support from the government. Californians with certain disabilities can receive insurance and financial assistance from the Social Security Administration and other governmental organizations.

Often, though, a person with a disability is disqualified from receiving benefits if they have sources of income that would allow them to provide for themselves. One of those possible sources of income is through an inheritance or income received as the beneficiary of a trust. If a person receives benefits from the Social Security Administration and from a standard trust, their benefits may be eliminated upon review.

Grounds on which a will may be challenged

A will is supposed to be a document through which a decedent communicates their desire for the disposition of their assets and property. In California a person must have the requisite mental capacity and be at least 18 years of age in order to create a valid will. However, even a properly executed will may face challenges by those who stand to inherit, or not inherit, under the terms of the testamentary document. This post will discuss several grounds on which a will may be challenged but will not provide a comprehensive discussion of this detailed topic.

One way that a will may be challenged is by proving that the will's creator did not have the requisite capacity to sign off on the contents of the will. A person who challenges the will may claim that the decedent suffered from a disorder that impaired their understanding of the contents of their will or that they otherwise did not know what they were agreeing to by signing the document.

Work with a dedicated attorney when creating your trusts

A trust can be revocable or irrevocable. It may be a constructive trust or an express trust. It can be created to protect the financial interests of the beneficiary through a spendthrift trust or it may be set up to benefit a charity rather than a specific person or group of people. There are numerous ways that people in California can set up their trusts, and in turn, numerous ways that they can make trust planning mistakes if they fail to take the appropriate considerations when establishing these important estate planning tools.

The many issues that can arise from the trust creation process should not be bars to individuals making trusts. Often it is simply a lack of knowledge about trusts that results in a person failing to create a trust that fully encapsulates their desires for what they want to accomplish through estate planning.

What is a health proxy?

Often when considering the benefits of estate planning Californians think about the importance of having plans in place for the disposition of their property upon their deaths. However, there is a particular estate planning tool that individuals can forget about that serves them during the critical periods of time when they are still alive but mentally or physically unable to make decisions for themselves.

This document is a health proxy. It should not be confused with a power of attorney. While a power of attorney also grants a second party the right to made decisions for an incapacitated person, there is a critical difference between it and a health proxy. Through a power of attorney a person grants another the right to make legal and financial decisions for them. Through a health proxy, a person grants another the right to make medical decisions for them.

Can a person disinherit their child?

The topic of inheritance, and in this case disinheritance, can be a very touchy subject for California families. It is generally believed that when a person dies their assets and property will pass to a spouse and if they do not have a spouse then their assets and wealth will pass to their kids. This is the usual pattern of events if a person dies intestate (without a will). If a person has a will, though, they can take an active role in who does and does not have rights to their post-death estate.

Generally, children do not automatically have a right to collect from their parents' estates. This is not the same for spouses. In community property states like California, a person owns one-half of what they jointly own with their partner, and to this end a decedent cannot give away something through their will that is also owned by their spouse. Children, however, do not have this joint ownership interest in property by virtue of their relationships with their parents.

Does your executed will truly reflect your wishes?

Individuals often recognize the importance of having an estate plan, even if they have not yet created one of their own. Drafting a will and executing trusts can be sobering for some Californians as they come to terms with the fact that their estate planning documents will generally only come into power once they, the creators of the documents, are dead. Often individuals create these and other testamentary devices all at once, so that their estate plans are complete. However, it is not uncommon for individuals to simply forget about the contents of their estate plans as time passes on.

An old estate plan and particularly an old will can be a disservice to a person whose end-of-life intentions have changed. For example, at the time that a person executed their will they may have been married with no children. Decades later that person may have had children with their spouse, gone through a divorce and then remarried and also have grandchildren. Who they wish to benefit from their estate and how they want their assets distributed may be very different than how they structured those terms in the contents of their original will.

Estate planning is still important despite proposed tax plan

Just recently President Donald Trump announced that his administration intends to impose sweeping changes to the tax structure of the federal government. One of those changes would involve ending the estate tax, which many readers of this California estate planning blog may know as the "death tax." Most individuals have an unfavorable view of this tax due to its potential to double-tax assets and income that likely were already subject to taxation at earlier points in time.

In the past, many people who have taken the initiative to create an estate plan have kept the federal estate tax in mind and have devised strategies that would limit their wealth's exposure to taxation under it. Now, however, it seems as though individuals may be able to reduce their concern over seeing their estates reduced due to the imposition of the federal estate tax.

Revocable living trusts are important estate planning tools

A living trust is a trust that a person creates while they are still alive. Unlike other trusts that are created at the time when the estate planner passes on, a living trust is one that is created by the estate planner and then is usually managed by that individual until the time that they pass away. Revocable living trusts are excellent estate planning tools for some Californians, because they allow individuals to maintain control over their assets, avoid probate and ensure that their end-of-life wishes are respected.

In order to create a living trust a person must create a trust and place their assets into it. A person may include their home in their living trust as well as their personal property, their liquid assets and bank accounts, retirement investments and a host of other forms of property. They may name themselves as the beneficiary of the trust as therefore live off of the trust while they are still alive. A living trust may continue to take care of a person in the event that they become incapacitated.

Determining soundness of one's mind while creating a will

Several posts on this California estate planning blog have discussed the requirements that individuals must meet in order to prepare a legally enforceable will. One of those requirements is that the creator of the will was of sound mind when the document was executed. There are several ways in which a person may be determined to not be of sound mind and this post will address those situations. As with all of the posts offered herein, the information provided in the remainder of this article should not be construed as legal advice.

The capacity of an individual to remember and understand is at the heart of their mental soundness. If a person does not understand what it means to make a will then they are likely not of sound mind to do so. Also, if they do not recognize how their testamentary actions will impact their heirs and loved ones then their power to make a will may be nullified due to their lack of mental soundness.

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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