San Diego Estate Planning Lawyer Blog

In past blogs we have discussed the need to have an experienced estate planning lawyer draft your trust. In California, a case has recently been filed against Legal Zoom, an online site that markets wills and trusts without the need to meet with an attorney. The case involves a man with a terminal condition who used Legal Zoom to draft a trust and pour over will. The documents were signed but the trust was never funded because financial institutions that held the man's money refused to recognize the validity of the documents. The man died without getting the trust funded.

It remains to be seen what the outcome of the case will be but it does highlight the importance of getting a lawyer to draft your revocable trust and companion documents. In most cases, a face to face meeting will elicit important facts so that your trust and other documents accurately reflect what you want to happen after your death.

Some circumstances that dictate hiring an attorney to create an estate plan are the following:
1. You are in a second marriage with children of other relationships
2. You own real estate in more than one state.
3. You want to benefit a charity in some way
4. You own a business and want to provide for someone to take over the business after your death
5. You have a taxable estate.
6. You have substantial assets in 401(k)s or IRAs
7. You have a beneficiary who is disabled
8. You have minor children and want to provide for distributions to them at intervals or for specific purposes.
9. Your children have drug or alcohol problems and need a trust that will take that into consideration
10. You want to have someone you can call when you have questions or want to make changes in your documents.

The experienced estate planning lawyers at Scott C. Soady, A Professional Corporation can assist you with your estate plan and will be around when you need to call with a questions or want to amend your documents. Our initial consultation is always complimentary.

Donating used cars has become an extremely popular way to reduce your taxes and benefit a charity. There is a lot of competition among charities to receive your donation of vehicles. Here are some tips to donating your car to charity:

First make sure the charity you are considering is a recognized non-profit charity, also known as a 501 (c)(3) organization. Some charities ask for donations of cars but do not have the 501 (c)(3)status which means your donation will not be tax deductible. You can find out if an organization is a qualified charity by looking on the IRS website.

Next make sure that the charity has a program to handle donation of vehicles. To maximize the amount of benefit to the charity, the charity should be able to handle the transaction without a “middle man.” If there is a “middle man” or intermediary, then find out what percentage of the donation the charity will receive.

When you transfer title to the charity, make a copy of the transfer document and notify the DMV of the transfer. Also it is a good idea to remove the license plates.

Get a receipt for your donation. The amount of the tax deduction is no longer the fair market value of the car. Your deduction will be determined after your car is sold and you get a receipt for the amount the car sold for. Also to receive a tax deduction for a car worth more than $500, you will need to fill out a IRS form 8283 when you do your taxes. If you are donating a car worth more than $5000, an appraisal is necessary to accompany a completed IRS form 8283. (c)(3) organization.

The IRS publishes a guide to donating your car which you can view online. If you want additional information about how to incorporate charities into your estate plan or how to reduce your taxes, contact us at Scott C. Soady, A Professional Corporation.

Probate as you probably know is the court supervised process for transferring an estate to the beneficiaries of a will or transferring an estate to the heirs of someone who died without a will or a trust. Take the following quiz to see how much you know about wills and probate:

1. Probate only applies if you have a will. Answer: FALSE
If you die with a will, there will be a probate. If you die without a will and don't have a trust either, there will be a probate.

2. Probate applies to your entire estate. Answer: FALSE
Probate is necessary for your probate assets. Some assets are not considered probate assets. Examples are assets which have a named beneficiary like life insurance, payable on death accounts, and property you own in joint tenancy with a right of survivorship.

3. If you have a revocable living trust you always avoid probate. Answer: FALSE
Assets which are transferred into your revocable trust do avoid probate however many people create a trust and fail to properly fund it because they forget to title their assets in the name of the trust. The trust document is useless if you die with assets which should be in the name of your trust, and are not. Assets left out that are over $100,000 will be subject to probate.

4. If you die without a will and are married, everything goes to your spouse. Answer: FALSE.
In California if you die without a will (ie.intestate) your estate will be divided among your spouse and your children.

5. A will is cheaper than a trust. The answer to this question is, in most cases, FALSE.
It is true that a will is usually less expensive to establish than a trust, however a will has future costs. When you die with a will, the distribution of your estate will be through the probate courts. Your estate will incur statutory probate fees for the probate lawyer and for the executor. A trust is a little more expensive to prepare initially but your beneficiaries will not have the fees of probate.

For more information on probate or to create a will or a trust, contact the estate planning lawyers at Scott C. Soady, A Professional Corporation.

Whether you are married or divorced, one of the most important decisions you have to make in estate planning is the choice of a guardian for your minor children. Some clients who are divorced ask whether they still need to nominate a guardian if they are divorced. Won't the other parent automatically get custody?

It is true that absent a compelling reason not to, a judge will grant custody of minor children to their other parent, however there are some situations where your nomination would be helpful to the court. Judges consider a number of factors in determining who should be a guardian such as:
1. The child's preference
2. Which individual seeking custody will best meet the needs of the child.
3. Which proposed guardian will provide the greatest stability.
4. The moral character of the proposed guardian.
5. The relationship between the child and the proposed guardian.
6. The choice of the child's mother or father.

Suppose you and your ex both pass away while the children are still minors? If you have nominated someone in your will or trust and your ex has not, your nomination will be the only document showing the courrt what your wishes were for your children.

Suppose you pass away and your ex is alive but is not able to care for the children, for example he or she is incapacitated, in prison, or unfit to raise them? It is difficult to prove that a parent is unfit but it can happen. Again if you have nominated a guardian, the court will give weight to that choice. So go ahead a name a person to care for your children, even if you are divorced.

Once your revocable living trust has been created, you need to "fund" the trust with your assets. A trust that is not funded is useless as a vehicle to avoid probate. If you have gone to the time and expense of preparing a trust, you certainly don't want your heirs to have to go through probate so it is very important that you "fund" your trust.

"Funding" your trust means that you transfer ownership of your assets into the name of your trust. In the case of real property, this means executing a new deed transferring the property from your name as an individual to your name as the trustee of your trust.

In the case of bank accounts, brokerage accounts, stocks, and bonds, you need to show the institution that your trust exists and you want the accounts to be in the name of your trust. Your estate planning attorney should have included a Certificate of Trust in your revocable living trust package, which is a simplified document showing the existence of the trust, the powers of the trustee, and other information about your trust without revealing the dispositive provisions.

Personal property is usually transferred into your trust by a document called an Assignment of Personal Effects or a General Assignment.

We see many clients who contact our office to amend their trust and we discover in the process that they have acquired assets since the creation of their trust which they have neglected or forgotten to title in the name of the trust. In other words, the trust was initially "funded" but later acquired asserts have not put into the trust.

Not all assets that you have as part of your estate are titled in the name of your trust. Cars, for example, are not usually put in the name of the trust because you are always purchasing different ones and they are easily transferred after death through the DMV. IRA's, pension plans, 401(k)s, and other qualifed retirement plans should have named beneficiaries. You can make your trust the secondary or contingent beneficiaries after individuals, depending on your situation.

It is important that after you create your trust, you have it reviewed periodically to see that it still relects your wishes and that everything that should be titled in the name of the trust, has in fact been transferred. We can help you create a trust or review your existing trust to be sure it is up to date. Call Law Office of Scott C. Soady, A Professional Corporation & Associates for a complimentary consultation.

Celebrities are always providing estate planning lessons for the rest of us. Gary Coleman who died in Utah in May at age 42 is the latest celebrity whose estate planning was a disaster. There are at least 3 wills, maybe more, that have been found and the fight has already begun between his ex-wife Shannon Price, his estranged parents, and a woman who formerly lived with the actor and was the CEO of his corporation, Anna Gray.

Supposedly there is a will executed in 1999 leaving everything to his manager Dion Mial, a will executed in 2005 leaving everything to Anna Gray ,and a document purporting to be an addendum to a will executed in 2007, one week after he and Shannon Price were married, leaving everything to Price. The document is not witness or notarized. Price and Coleman divorced in 2008 although according to Price, continued to live together in a common law marriage. (Utah is one of a dozen states that recognize common law marriage.)

Friend and co-star Todd Bridges also has said he has a secret will expressing Coleman’s true wishes about his estate and his final wishes. The actor’s estranged parents also claim that since Coleman and Price were divorced, they have the legal rights to his remains. The court in Utah has already scheduled a hearing for July 2 to sort things out and appoint a personal representative of the estate.

This is another example of how important it is to have a comprehensive estate plan in place and constantly update it after marriage, divorce, change in beneficiaries, etc. It also is important to do your estate planning according to the laws in your state. A will that is not notarized or witnessed is not going to hold up in court as a valid testamentary document.

Properly drafted estate planning documents are so important, one wonders why celebrities who have the means to do it correctly, often do not. The experienced estate planning lawyers at Scott C. Soady, A Professional Corporation can help you avoid the disasters common to celebrities and create an estate plan that will not cause difficulties for your loved ones after your death.

Often trusts provide for the distribution of assets at different intervals. This is a common occurrence where parents want to provide for their children during their minority and then spread out the distributions during adulthood. A typical trust might leave a certain percentage to a beneficiary at age 21, 25, and 30. Other parents may want to provide for distributions at age 25, 30, and the remainder at 35. In the years between the distributions the trustee has the discretion to make distributions for "health, education, support, and maintenance."

The IRS in Section 2041of the Internal Revenue Code sets out ascertainable standards for "health, education, support, and maintenance." The Treasury Regulations provide some assistance in knowing what these terms mean. "Health" for example includes "medical, dental, hospital, and nursing expenses" as well as "health maintenance and comfort." The trustee can probably make distributions that are not strictly medical in nature, maybe food supplements or a item of comfort.

"Education" is more narrowly defined to include college and professional education. Thus if the Trustor wants to expand on that definition to include such things as trade school, art school, travel expenses to and from school, etc., those items should be specifically set out in the trust.

The terms " support" and "maintenance" are synonymous. They include "support in reasonable comfort" and "support in the accustomed manner of living."

Though these ascertainable standards are helpful, the Trustee is still left with making often difficult decisions. Does the beneficiary need a sports car for transportation to work and college or would a used car do? Does the beneficiary have to go to an expensive university to get his education? What kinds of expenses would qualify as for health?

The way you can help your trustee is to create a trust while you are alive that clearly specifies some guidelines as to what distributions would be acceptable for health, education, support, and maintenance. The more specific you are in your trust document as to what your wishes are and what the perameters are for distribution, the easier it will be for the trustee to decide what are the permissible reasons to make a distribution to your beneficiaries.

Roy M. Dopplet & Associates can help you create a trust which will be comprehensive and tailored to include specific definitions of what is an appropriate distribution to a beneficiary. Call us for a complimentary consultation.

You hear the term "estate" used alot in the context of estate planning but there are many variations: gross estate, net estate, probate estate, non-probate estate, trust estate. How do all these terms differ?

The value of your estate at the time of death is called your "gross estate". This includes cash, bonds, stocks, real property, IRAs, pension benefits, life insurance, other investments, personal property, business interests, and any other assets owned. It is without consideration of debt that may be owned or taxes that need to be paid. It is your gross estate that determines whether there will be any estate tax that has to be paid. 2010 is an interesting year however because during this year, there is no federal estate tax whatsoever, regardless of the value of your estate. Unless Congress acts before 2011 to change it, the estate tax is set to return to a level of $1 million in 2011. This means that estates valued in excess of $1 million will be subject to estate tax.

"Net estate" is the value of your estate once all the expenses have been deducted such as funeral expenses, trust or probate administration expenses, taxes, and debts. It is the "net estate" that is distributed to your heirs or beneficiaries.

If you have a will, your "probate estate" consists of the assets held in your name at death that do not have a beneficiary designated. It is all of the assets that you own that will be subject to probate and distributed to your beneficiaries by your executor. If you don't have a will, you die "intestate" and there will also have to be a probate to distribute all of the assets that do not have beneficiary designations.

A "non-probate" estate is the assets that you own jointly with another person, or that have a beneficiary such as life insurance, or an IRA.

Another estate term to remember is your "trust estate". These are the assets you own at death that are in the revocable living trust you have created,ie. they have been transferred into the name of your trust.

If you are thoroughly confused with all this "estate" jargon, feel free to give us a call at Scott C. Soady, A Professional Corporation. We can help you understand the various concepts and make sure that your "estate", whatever it is, will be distributed to your heirs and beneficiaries in the way that corresponds with your wishes.