Morgan Law Offices

Wills

RHM10 — Sun, 22 Jan 2012 06:22:11 +0000

A Will is the traditional document used to transfer a decedent’s estate. The testator expresses his wishes in writing with a witnessed will (two witnesses required in California) or a holographic will (completely hand written, signed and dated by the testator). In a Will, the testator names his beneficiaries, what they are to receive and who is going to administer the estate (the executor). The testator must name a spouse and any children in the document or they can legally challenge and receive their intestate share. The intestate share is the provision that the state makes for distributions of an estate without a Will. The proponent of the Will petitions for Probate and if the Will is accepted by the Court it is admitted to Probate for administration. A Will has the advantage of distributing a testator’s estate according to the testator’s wishes as to beneficiaries, what they will receive and who will be in charge. In California, small estates under $100,000 can be administered without Probate. In a Will a parent can also name a guardian of the person and estate of his or her minor children.

Trusts

RHM10 — Sun, 22 Jan 2012 06:21:42 +0000

A trust is a fictitious legal entity used for a variety of purposes. A revocable living trust has become a common way to hold property in California. It offers some significant advantages over direct ownership of property. It can serve as a Will substitute. A trust is created when the grantor or settlor (founder of the trust) creates the entity by naming a trustee, a beneficiary and funds the trust. Trusts in California are revocable unless expressly made irrevocable. For a revocable trust, the settlor can modify the terms of the trust or revoke it altogether. In an irrevocable trust, the terms of the trust cannot be modified or revoked. This is most commonly used to transfer legal ownership and taxable income. One useful type of irrevocable trust is an irrevocable life insurance trust, often used to add life insurance outside of a person’s taxable estate. The trust concept is beneficial because it allows for the split of the incidents of ownership, management and beneficial enjoyment. The trustee can manage the trust property and distribute it to the beneficiaries according to the grantor’s instructions. The trust can therefore function after the grantor’s disability or death. This is most commonly used to avoid probate of the grantor’s estate or conservatorship.

Health Care Directives

RHM10 — Sun, 22 Jan 2012 06:20:16 +0000

A person can specify a health care agent to make medical decisions in the event of his or her disability. The health care directive can also include instructions to physicians and other care providers, long term care choices, end of life decisions and even funeral arrangements.

Power Of Attorney

RHM10 — Sun, 22 Jan 2012 06:18:52 +0000

A power of attorney is a legal document which allows decisions to be made by the person’s specified attorney-in-fact. The power of attorney can be special (limited to certain assets or decisions) or general. In recent years, the law has allowed for “durable” powers of attorney which survive the individual’s disability. In fact, a “springing” power of attorney can be triggered by the disability of the person granting the power.

Probate and Probate Avoidance

RHM10 — Sun, 22 Jan 2012 06:17:29 +0000

Probate
Traditionally, when a California resident died, his or her estate would go to Probate Court. This would allow for the proof of a Will, if any, or handling of the estate by the laws of intestate succession, which is the distribution to one’s heirs in the absence of a Will. The person who handles an estate is the personal representative, an executor in the case of a representative named in the Will or an administrator if not named in a Will. Probate allows for inventory and appraisal of the estate, sale of assets, handling of creditor’s claims and distribution to beneficiaries or heirs. All is a public record and hearings are in the Probate Department of the Superior Court. In some instances this process can be beneficial as it provides a forum for resolution of creditor claims or rights to the decedent’s estate.
Avoid Probate
Many people and their families would prefer to avoid Probate. The Court process is a public record, sometimes bringing unwanted publicity to estate matters. In addition, there are delays and expenses caused by Court filing, publication, notice to creditors, inventory and appraisal, accountings and petitions in Court. In addition, assets are subject to a commission for the personal representative and attorney fees for the Probate Counsel, Court filing fees, appraisal costs for the probate referee, etc. In a large estate, these can be substantial. With the values of residential property in California and especially in the San Francisco Bay Area, the expenses can be substantial. Small estates in California (currently under $100,000) can be administered without Probate.

Trust and Probate Litigation

RHM10 — Sun, 22 Jan 2012 06:15:38 +0000

If there are questions over the validity of a Trust or Will, it can be litigated in Probate Court. This can include claims that the documents are forged or fraudulent, that they were secured by undue influence or for interpretation of the language of the document. The Probate Court can also resolve disputes over administration of the Trust or Estate. As more estates plans have included Trusts, more legal disputes have involved the validity and administration of these instruments.

Trust Administration

RHM10 — Sun, 22 Jan 2012 06:14:30 +0000

A trust for a decedent can be administered informally unless an interested party requests court supervision. It is necessary to see that the assets are secured and appraised, that income and estate taxes are paid, that claims are resolved, that sub-trusts created at the time of a decedent’s death are funded. In the case of federally taxable estates, a federal estate tax return and payment of tax are due 9 months after the decedent’s death. Any disclaimers are due by that time. Notices must be given as required by the Probate Court.

Guardianship

RHM10 — Sun, 22 Jan 2012 06:13:18 +0000

This concept includes guardianship of the person or estate of a minor. If a person who has not reached majority (age 18) is to receive property, a guardianship may be required. This is a formal Court process to report on and protect the assets of the minor. Guardianship of the person may be required when the parents are deceased or unable to care for minor children and this would involve issues such as where the minor will live, go to school and health care decisions.

Conservatorship

RHM10 — Sun, 22 Jan 2012 06:12:20 +0000

When an adult is unable to handle his or her own financial or health care decisions, a conservatorship may be required. This is a public process in Probate Court, although some issues can remain confidential. The Court determines whether or not a conservatorship is necessary to protect the person and or the assets of the individual. The appointed conservator then steps in and inventories the estate and makes periodic reports to the court including accountings. Key decisions like changing residence require Court approval. In some instances, an advance health care directive and a durable power of attorney may be used instead of a formal Probate Conservatorship.

Estate Planning

RHM10 — Sun, 22 Jan 2012 06:11:10 +0000

Estate planning refers to the planning for efficient handling of the estate of an individual or individuals. It may have as its goal support of a spouse or children, the passing of wealth between generations or the support of worthwhile charities. With efficient planning these goals are achieved in an orderly and efficient way, with the minimum cost for administration and the minimum burden from taxation. The field has gone through extraordinary changes in the last 30 years. Wills, once common, have increasingly been replaced by revocable living trusts. Some of this has been in an effort to avoid commissions, attorney’s fees, costs, public documentation and the delays of Probate Court. In the Santa Clara Valley aka Silicon Valley, home prices and asset values have risen to the extent that a typical estate may have costs and fees well into six figures. The people of the State of California repealed the inheritance tax. The Federal Estate and Gift Tax Codes have gone through dramatic changes, including the addition of the unlimited marital deduction, increased exemption amounts and different tax rates. It has become necessary to review estate plans periodically from both the perspective of changes in age and ability of beneficiaries to changes in tax law.