San Diego Estate Planning Lawyer Blog

Modern technology has altered many things in our society. Can technology improve the area of estate planning? How about an electronic or video will or trust? A client recently contacted our office to ask if he could videotape his father who was in failing health explaining orally how he wanted his assets to be distributed after his death and would that be honored as a will. The short answer is no.

A video will is created when the testator reads his will or states his wishes in front of a video camera. A video will is not recognized as a valid will in any state. A video will can be helpful where there might arise a question later as to the testator's capacity however it cannot act as a replacement for a written will signed in the presence of witnesses. If it is going to be used, it should be as a helpful addition to your estate plan, not a replacement for a written will or trust. Use of a video will should probably only be done upon the advice of an experienced estate planning lawyer so that it is done correctly and doesn't cause more problems that it solves.

What about an electronic will? Nevada is the only state that recognizes electronic wills. The Nevada statute requires that the electronic will must contain the date and the testator's electronic signature which could be a signature by fax, typing a name at the end of an e-mail, or including a personal identification number. In addition the will must include at least one authentication characteristic of the testator, which could be a digitized signature, voice recognition, fingerprint, retinal scan, or other type of authentication. The statute also requires that the electronic record containing the will be created and stored in a manner such that there is only one authoritative copy of the will in existence.

It will interesting to see if either the video will or the electronic will catch on in this decade. Maybe some things shouldn't go the technology route and estate planning may be one of them.

For now, there is no estate tax in 2010. Everyone expected Congress to address the estate tax issue in 2009 but it did not happen. The House passed a bill that would have permanently kept the 2009 exemption but the Senate failed to vote on the estate tax issue leaving everyone wondering if they will respond during the next session. Without a law passed by Congress, the estate tax will re-appear in 2011 with a reduced exemption from 2009's $3.5 million to $1 million.

If Congress does enact an estate tax law sometime in 2010, will it be retroactive to January 1, 2010? Would a retroactive law be constitutional? No doubt there will some decedent who dies between January 1, 2010 and the date of the law who has an estate subject to estate taxes. The heirs or beneficiaries of such an individual would certainly litigate the retroactivity issue.

The uncertainty may cause some people to consider review their existing plans to determine the effect of the repeal in 2010 and the effect of a much lower federal estate tax exemption in 2011. Particularly individuals who have taxable estates and bypass or exemption trusts should get a review of their current trust to see if the repeal would have unintended consequences should they pass away. Many trusts have language referring to the federal estate tax exemption to allocate assets among different beneficiaries. Depending on how the trusts are set up, the repeal of the estate tax entirely could have unintended results such as disinheriting a child from a previous marriage or disinheriting a spouse from a second marriage.

If you have questions about the effect of the estate tax repeal and want to make sure your trust will still do what you intended, call us at Law Office of Scott C. Soady, A Professional Corporation to schedule an appointment.

An irrevocable trust is one that usually cannot be revoked, modified or amended. Trusts can become irrevocable in several ways. Some are created to be irrevocable at the time they are created. An example of this type of irrevocable trust is a Irrevocable Life Insurance Trust (ILIT). This is a type of trust that is created to hold life insurance and pass the death benefit from such policies to the beneficiaries of the trust without incurring any income or estate taxes on the transfer. Such a trust cannot be revoked, changed, or amended after it is created except by court order.

Some trusts for married couples become irrevocable upon the death of the first spouse. A typical example is an A/B trust, sometimes called a Bypass Trust or Exemption Trust. With this type of trust, the Deceased Spouse's Trust becomes irrevocable after the first death and cannot be changed, amended, or revoked.

Other trusts which can be irrevocable are certain types of charitable trusts and a Qualified Personal Residence Trust (QPRT)There are some instances however, where a trust which is irrevocable can be modified by court order. Civil Code Section 3399 permits a contract (which a trust is) to be reformed when the writing, through mistake or fraud, fails to express the intent of the parties. Reforming a trust might be appropriate when due to a drafting error or scrivener's error, the intent of the individuals creating the trust has not been fulfilled.

Probate Code Section 15409 also permits a trust to be modified if “owing to circumstances not known to the settlor (person creating the trust) and not anticipated by the settlor, the continuation of the trust under its terms would defeat or substantially limit the accomplishment of the purposes of the trust.” The scope of what the court can do is broad. The Probate Court can authorize acts that are forbidden by the terms of the trust or not authorized.

Under Probate Code Section 15403 all beneficiaries of an irrevocable trust can consent to modification or termination of a trust unless the court finds that a material purpose remains for continuance of the trust and that purpose outweighs the arguments for termination or modification. Probate Code Section 15404 is even broader allowing termination or modification of a trust without court order if the settlor and all beneficiaries of the trust consent.

So there are alternatives if you have an irrevocable trust you want to reform, modify, or terminate. We offer a complimentary consultation if you would your irrevocable trust reviewed.

As many people approach their sixties, they begin wondering at what age they should start taking social security. It can be a confusing decision.

Center for Retirement Research at Boston College has a good link to download the Social Security Claiming Guide. This document has all the information you need to determine when you should begin taking social security. There are a number of factors to consider including how much you need in retirement income, your age, if married what your options are to take your spouse’s social security, etc.

Decisions also have to mde about Medicare. For information on Medicare, see this site which will link you to the Medicare website as well as other sites for Medicare information.

Retirees approaching social security age should also address other issues also such as whether they have their finances in order and on track to provide income after they retire. They should also make sure they have an updated power of attorney for assets and an updated health care directive. These two documents are critical should you become incapacitated.

If you have a revocable living trust, you should have these documents as part of your revocable living trust package but you should review them periodically to be sure they still express your wishes and that you have named someone you trust as your agent. Health care directives should be reviewed to be sure yours contains a HIPAA release. Some of the older directives or powers of attorney for health care do not contain language about HIPAA. Without a HIPAA release, your agent may have difficulty speaking to your doctors or obtaining your medical information.

Law Office of Scott C. Soady, A Professional Corporation has been assisting retirees for years with their estate planning needs. We would be happy to help you with yours.

The first federal trial to determine if the Constitution allows states to ban same sex marriage began this week in the U.S. District court in San Francisco. The trial, which is supposed to last 2-3 weeks, involves a challenge to Proposition 8 which was passed by 52% of the voters in 2008. Prop 8 reinstated the ban on same sex marriages after the California Leglislature had voted to permit them. For a discussion on Prop 8 and same sex marriage, read our article on our family law website.
The plaintiffs, two gay couples, contend that there is no rational basis for limiting marriage to a man and a woman. Opponents, the supporters of Prop 8, are arguing that the voters were within their rights to establish that marriages should be limited to heterosexual couples. Testimony in the first few days has centered around historians who are testifying as to how Prop 8 is part of a long tradition of discriminating against gay couples.

Regardless of the outcome, the case will probably find its way to the United States Supreme Court. The ruling will lay the groundwork for the highest court to tackle the issue of same sex marriage. The Supreme Court has already gotten involved to the extent of ruling that the trial could not be broadcast on U-Tube.

It will be interesting to see what the District Court rules and how soon the U.S. Supreme Case will hear any appeal. It is doubtful there will be any resolution for couples in California any time soon. Same sex couples with the current uncertain status of the law can have unusual estate planning issues, with or without marriage and with or without children. Law Office of Scott C. Soady, A Professional Corporation has represented same sex couples with family law issues and estate planning issues. Call us if we can help. Your initial office visit is always complimentary.

As you travel through different stages of your life, you may not require the same estate plan. Estate plans are based in part on the phase of life you are in. An estate plan you created when you were in your 30's could be very different from the one you need in your 60's.

1. Young and Single. When you are in your 20's, all you probably need is a Durable Power of Attorney for Finances and an Advance Health Care Directive. Both of these documents are ones you need if you become incapacitated. If you are single, this probably means that you name your parents to make financial decisions if you are unable to and give them the power to make medical decisions for you in the event of a temporary or permanent incapacity. Once you purchase your first home, however, it is time to create a will or a trust as the centerpiece of your estate plan.

2. Newly Married. Upon your marriage, you will probably want to name your spouse as your agent on your durable power of attorney for finances and your advance health care directive. If you haven’t already, you should also create a revocable living trust and name your spouse as the beneficiary of your 401(k), life insurance policies, pension or retirement plans.

3. Married with Children. Once children come into your life, it is time to amend your trust to provide for your minor children should something happen unexpectantly to both spouses. You should make provisions for how your estate would be distributed to them and also nominate guardians to raise them. Beneficiary designations on life insurance policies, pension plans, etc. should also be updated to cover a situation where both parents die simultaneously.

4. The Middle Ages. During these years, your trust should be updated as changes occur in your life such as divorce, additional children, changes in financial situation, inheritances or substantial increase in net worth, or death of a beneficiary or trustee.

5. Retirement. During the retirement years, you may want to add provisions to your trust to make distributions to your grandchildren. You may want to provide for certain charities in your trust and you probably want to decide who should receive certain items of personal property such as jewelry, family heirlooms, or other items of personal property. If your estate is likely to be subject to estate taxes, you should consider reducing the size of your estate through gifting or creating an irrevocable life insurance trust or charitable trust.

Estate planning is not a one time project. Estate planning continues throughout your lifetime. As your life changes, your goals and objectives change which need to be incorporated into your estate plan. For all of life’s stages, call us at Law Office of Scott C. Soady, A Professional Corporation if we can help.

You may remember that when famous baseball player Ted Williams died, his body was sent to the Alcor Life Extension cryonics company to be kept frozen until such time as medical advances could bring him back to life. Reportedly Williams’ head is being kept frozen separate from the rest of his body.

Alcor Life Extension Foundation and other cryonics companies store a body in liquid nitrogen at a temperature of minus 196 degrees Celcius in order to preserve the cells and DNA until science enables people to reverse their death. Such a procedure costs upwards of $150,000.

In Tampa Florida recently there was a case of first impression dealing with a similar situation. A 48 year old man who was found dead in his apartment had a medical bracelet on with instructions not to embalm him or to perform an autopsy. Since his death was suspicious, the county medical examiner wanted to perform an autopsy but the autopsy was suspended when a call came from a cryonics company, the same company that houses Ted Williams remains, and requested that the body not be autopsied as that would affect the man’s hopes of someday being brought back to life. Both sides went to court and the judge ruled that the autopsy would be performed and then the body would be released for whatever disposition the family chose. The medical examiner did agree however to try to minimize the dissection of the body to aid in the probability that the body could at some point be restored to life.

Unique wishes like those of this individual should definitely be clearly set out in a health care directive. In the case of Ted Williams, family members were in disagreement as to whether this was something the baseball celebrity really wanted. If you have unusual wishes about the disposition of your remains, services, or such things as embalming, cremation, or burial, be sure you have executed an Advance Health Care Directive that sets forth your wishes. If you don’t have an Advance Health Directive and would like one drafted to set forth your wishes, call us at Law Office of Scott C. Soady, A Professional Corporation.