San Diego Estate Planning Lawyer Blog

Previous blog posts have discussed the fact that in 2010 there is no federal estate tax imposed on a person's estate, no matter how large the estate. In 2009, the federal estate tax was levied on estates over $3.5 million. In 2010 there is no estate tax because Congress failed to approve the bill to keep the estate tax at the 2009 level with a maximum 45% tax rate.

No one expected that the 74th richest man in the world would die in 2010. Texas gas pipeline tycoon Dan Duncan suddenly died in March at the age of 77 with an estimated $9 billion estate. No one knows the details of his estate plan but his death has caused many to wonder if Congress would now reinstate the 2009 estate tax and make it retroactive to the begining of the year so that the government could receive much needed revenue from his estate, maybe in the billions. Mr. Duncan was a noted philanthropist, so he may have provided for a number of charitable gifts which pass to the beneficiaries free of estate tax.

If Congress fails to act before the end of the year, the estate tax exemption is set to return to $1 million with a maximum tax rate of 50%. Such inaction by Congress will potentially affect many peope who are not billionaires. In California especially, where real property values are high, many upper middle class individuals would be subject to estate tax with estates over $1 million.

Estate planners are watching all of this with interest as it determines the type of trusts that are drafted and the estate planning advice we give to clients. If we can answer any questions for you or review your estate plan to see if it is flexible enough to deal with changes in the estate tax, please contact us.

Choosing a successor trustee for your revocable living trust is an important decision. The choice of the individual or entity who will manage your assets, possibly invest your assets, ensure that the provisions of your trust are carried out after your death with the appropriate distributions to your beneficiaries is arguably one of the most important estate planning decisions you will make. Choosing a successor trustee that is not right for the job can lead to tension between the trustee and beneficiaries, breach of trust by the trustee, or costly trust litigation.

There are several options for a successor trustee. Probably the most common choice is a member of your family. Usually parents make their children the successor trustees of their trust. One thing to keep in mind is the relationship between the proposed trustee and the beneficiaries. Is there already discord or strained relationships among your children that could worsen if one were chosen over the others? Are some of your children better equipped to handle trust administration than others? Think carefully about making your children co-trustees, particulary if you have more than 2 children. For example, 4 children having to agree on aspects of trust administration because they are all trustees could be a recipe for disaster. In some families, 2 co-trustees or even more would be fine. The main consideration is whether the individual has the skills, experience, time, and demeanor to carry out your wishes. It goes without saying that trustworthiness and honesty is also important, maybe even more so than any particular experience with managing money.

Another choice is to name a trusted friend or financial advisor to be your successor trustee. Maybe your children have busy lives and you want to reduce the burden on them or avoid family discord. A trusted friend might be a good choice, however there are also circumstances where friends or a financial advisor or even a family member does not carry out his fiducariary duty of being a trustee and utilizes trust assets for their own benefit.

A third alternative is to name a corporate trustee. This is usually a bank or trust company that is in the business of managing trusts. They have extensive experience in investing assets and managing a trust in compliance with the law. They are also bonded and you have the ability to recover any losses from the bond or from the corporation's assets. Corporate trustees charge a fee however, usually a percentage of the value of the trust assets they are managing.

Lastly, consider a private professional fiduciary. Such a fiduciary is in the business of managing trusts and is licensed and bonded. This alternative is a good choice for clients who have no children or family members they prefer or for clients who just want some neutral individual to administer the trust. In California, private professional fiduciaries are licensed by the State and most belong the the Professional Fiduciaries Association of California.

Our estate planning lawyers at Scott C. Soady, A Professional Corporation can assist you with choosing the successor trustee that is right for your trust.

Today many people are choosing cremation over a traditional burial. Many of our clients at Scott C. Soady, A Professional Corporation ask that we include in their advance health care directive provisions that they prefer cremation and want their ashes scattered at a designated location or at the discretion of their agent.

San Diego has a lot of wonderful options because of our beautiful setting near the ocean. Many people prefer their ashes scattered in the ocean. California law requires that cremated remains must be scattered at least 500 yards from the shore. There are many boats for hire in San Diego from boats as small as rowboats to speedboats to 65 foot private luxury yachts complete with refreshments. You can choose to view a scattering from shore or conduct a ceremony out in the water, with video or digital pictures.

Also popular in San Diego is the paddle-out for surfers. The paddle-out came from the Polynesian tradition of paddling out into the ocean, forming a circle, and remembering the loved one with flowers or leis.

In San Diego there are also small planes that will scatter ashes in such places as La Jolla, Catalina, Big Bear, or even Sedona or the Grand Canyon. You can't go along for safety reasons, but there are some viewing sites from which you can observe the scattering.

Whatever the final arrangements are that you prefer can be set forth forth in your estate planning documents so your loved ones can fulfill your wishes and remember you in the manner you would have wanted. For health care directives and all aspects of estate planning, contact us if you would like a complementary consultation.

Guardianship in California is the court process by which a person other than a parent is given custody of a minor child or given the authority to manage a child's estate. The petition for guardianship can be filed by a relative or "any other person on behalf of the minor." Usually we see family members petitioning to become the guardians of their grandchildren, nieces or nephews or maybe siblings.

In the recent case of "Octomom" Nadya Suleman who gave birth to octoplets in January 2009, it was not a relative but a "stranger" who petitioned the court for a guardian of the estate to be appointed for the children, claiming that an independent person should oversee the children's finances if they were going to earn money from reality TV shows and sellling photos.

The Court in Orange County first ruled in favor of the "stranger" who was a self-professed child advocate, who filed the guardianship petition through his attorney Gloria Allred. The Court appointed a guardian ad litem to investigate the matter and report back to the Court. Recently though a Court of Appeals Court has ruled that although the California Probate Code does legally allow a "stranger" to file a petition for guardianship, he or she must show evidence of actual financial mismanagement by the parent. The Court dismissed the petition because there was no evidence that Octomom was mismanaging the childrens' money.

At Scott C. Soady, A Professional Corporation we handle guardianships of the person and of the estate. Sometimes family members or friends need to be appointed the guardian of a minor child whose parents for some reason, are permanently or temporarily unable to care for their child. Call us if we can assist you.

The Illinois Supreme Court recently held that a Jewish couple's wish to disinherit any of their grandchildren that married outside their faith was lawful. The particular will had provided that upon the death of the surviving Trustor, if any grandchild had married outside the Jewish faith, their non-Jewish spouse had a year to convert to Judaism. If they did not, the gift would lapse. The Illinois Supreme Court held that the clause was valid as long as the method of disinheritance did not encourage divorce. One of the Justices wrote that the Trustors were "free to distribute their bounty as they saw fit and to favor those grandchildren whose life choices they approved of."

Restraints on marriage contained in wills or trusts are generally held by the Courts to be void as against public policy. In California, Civil Code section 710 provides that conditions imposing restraints on marriage.... are void. Althought there doesn't seem to be as yet a case in California involving a clause such as in the Illinois case, it seems logical that the California courts would rule similarly and uphold a clause that provided for disinheritance of a beneficiary who married outside of a particular faith.

Including a provision to disinherit a particular beneficiary because of religion, or on grounds of substance abuse or other conditions, is a tricky area of estate planning. You should consult an experienced estate planning lawyer if you want to create such provisions. At Law Office of Scott C. Soady, A Professional Corporation, we can help you create an estate plan that will contain such provisions. Call us to schedule a complimentary consultation.

The use of special needs trusts in estate planning is becoming more common than in generations gone by. A Special Needs Trust, also known as a Protective Trust, Medicaid Trust, or Supplemental Needs Trust is one created specifically for a disabled beneficiary. Often disabled children and adults are receiving government benefits such as social security and Medi-Cal. If a family member leaves money to the disabled beneficiary outright, the beneficiary could be disqualified from receiving those benefits. Anyone receiving social security disability benefits, for example, cannot have more than $2,000 in his or her name without losing their benefits.

In the past, families with disabled children would disinherit the child and leave assets to another family member who promises to use the inheritance to take care of the disabled child. The problem with that approach is that those inherited assets could be subject to creditor's claims, lawsuits, bankruptcy, divorce settlements, and tax liens of the individual who inherited the assets. That individual could also change their mind or predecease the special needs beneficiary.

With some 5 million children in American today who have physical, emotional, and mental impairment, parents and other family members are planning ahead to create a special needs trust that will supplement, not replace, the benefits the child is already receiving. Such supplemental needs can include such things as computers, books, music lessons, camp, concert and sporting event tickets, and vacations. Assets can also be used to remodel a home or purchase a handcapped equipped vehicle.

Special Needs Trusts can be set up by parents as part of their own estate plan or by grandparents who want to leave an inheritance to a disabled grandchild. They can be funded with assets of the parents or grandparents and in some cases, with life insurance proceeds.

The estate planning lawyers at Scott C. Soady, A Professional Corporation can assist you with an estate plan that will include a special needs trust. Call us or email us with any questions or to schedule an appointment.

Trust administration is the work that has to be done after the death of a Trustor. The person or entity that is named as successor trustee has certain duties and obligations they have to perform to wind up the Trustor’s financial affairs and make distributions to the beneficiaries. If any of the beneficiaries are minors who are receiving distributions at various intervals, the administration of the trust can last years.

Your basic duties as a successor trustee involve the collection, management, investment, and distribution of the trust assets. One of your duties to the beneficiaries is to keep them informed of the trust administration so you need to keep careful records of all the transactions that you perform as trustee. Here is an example of some of the tasks you need to do when you become successor trustee of a trust. Some are time sensitive and lead to consequences if not done in a timely manner.

1. Obtain a taxpayer ID number for the trust.
2. Notify all the heirs and beneficiaries of the Trustor’s death and the existence of the trust. If the beneficiaries request it, a copy of the trust must be provided to them.
3. Open a new account in the name of the trust with you as the Trustee.
4. Inventory and Appraisal. You must prepare an inventory of all of the decedent’s assets and determine their fair market value as of the date of the decedent’s death.
5. Record Keeping. This is very important. You as the Trustee must keep careful record of all the transactions you make on behalf of the trust. Beneficiaries may request that you give a full accounting and report not less often than annually or at the termination of the trust unless a beneficiary waives an accounting in writing.
6. File a federal estate tax return if estate taxes are due. Also file federal and state income tax returns.
7. File for a Parent/Child exemption if appropriate. If real property is inherited by a child from a parent, there is an exemption for reassessment of property taxes.
8. File an affidavit of death in each county where the decedent owned real property.

Depending on the complexity of the trust and whether it is ongoing for a period of time, you may have other tasks and responsibilities such as managing the trust investments, make distributions of income and principal to the beneficiaries in accord with the terms of the trust. Being a trustee is a substantial responsibility and a trustee often seeks legal assistance. At Law Office of Scott C. Soady, A Professional Corporation, we also see successor trustees who have started to administer a trust but found it difficult or time-consuming to handle all of these details and retained our office to finish the administration. Give us a call for assistance with all phases of trust administration.

There are many reasons why a will or a trust may be challenged and set aside as invalid. Here are some of the more common grounds to contest someone's will or trust.

1. Coercion - If someone coerces the testator (the person creating the will or trust) to make changes in a will or a trust or forces them either physically or emotionally to do something that is not what they truly wish to do, the document can be challenged on the basis of coercion.

2. Duress - If someone exerts pressure upon he testator to change their will or trust or make dispositions they don't want to do, the document could be held invalid on the basis of duress.

3. Undue Influence - This is very similar to duress. Undue influence could be threats, manipulation, isolation, selling falsehoods. Pressuring someone to make changes to their will or trust could be both duress and undue influence and even coercion.

4. Fraud - This ground may occur where someone alters the will or the trust, replaces pages, destroys an amendment, or forges a signature.

5. Improper Execution - Wills have to be signed in front of witnesses who attest that the testator is of sound mind and is who he or she purports to be. Trusts have to be notarized by a notary public who requires identification to verify that the testator is indeed the individual signng his or her trust. Improper execution can invalidate a will or a trust. This ground sometimes appears where a testator has prepared a do-it-yourself document.

6. Lack of Capacity - Testators should be of sound mind and not suffering from a disease or condition that renders them incapable of understanding what they are doing. People who have Alzheimer's disease, dementia, or a brain injury may not be capable of executing a will or a trust. Another example is where the person temporarily lacks capacity such as if the testator is drunk or under the influence of drugs.

7. Incompetence - A testator may be incompetent to create or execute a testamentary document. This ground overlaps with lack of capacity.

If you are concerned about the validity of a will or trust, give us a call. We have experience in estate planning as wells as probate and trust litigation. Your first consultation is complimentary