San Diego Estate Planning Lawyer Blog

Currently there is a feud going on involving two of Walt Disney’s grandchildren and their share of the huge Disney fortune. Walt Disney died in 1966 leaving two daughters and 10 grandchildren. One of his daughters Sharon Disney had married and then divorced a real estate developer named Bill Lund who located and assisted in the purchase of the land which became the Disney World site. Sharon and Bill had two children Michelle and Brad. Sharon created an estate plan to leave her share of the Disney fortune to her two children from her marriage to Bill and one child from a previous relationship. She made her ex-husband as one of the four co-trustees of the childrens’ trusts. The trustees were to determine whether the three children were competent to receive the monetary distributions at ages 35, 40, and 45 and the yearly payments of income. The disbursements were approximately $20 million per child every five years.

To complicate everything, Sharon then died and her ex-husband remarried. Then in 2009 Michelle, Sharon and Bills’ daughter, suffered an aneurysm and her father began caring for her as the trustee of her trust. Family members sued in court to remove Bill claiming that he was trying to isolate her from family and friends and take over her estate. As time went on, the other co-trustees of Michelle’s trust also filed petitions in the probate court to remove Bill as a co-trustee. Eventually Bill agreed to resign as trustee in exchange for significant yearly payments.

The drama continues over the Disney fortune because Brad, the son of Sharon, is developmentally disabled and needs a conservator to manage his affairs. Michelle, his sister, does not believe that her father Bill and his new wife should be managing Brad’s estate. The huge attorneys fees are draining the estate.

Such family feuds that are occurring in the Disney family occur even in non-wealthy families. What this illustrates is that even with careful estate planning, there can be court battles. Beneficiaries file petitions to remove a trustee for not doing his job properly. Family members disagree as to who should be the conservator of a developmentally disabled beneficiary or a beneficiary who is incapacitated.

The attorneys at Scott C. Soady, A Professional Corporation handle all of the issues that are involved in the Disney estate: conservatorships, representation of beneficiaries, trust litigation including petitions to remove an existing trustee, and other estate planning issues that are involved when beneficiaries disagree about the trust distributions. If you need assistance, we always offer complimentary consultations on any estate planning issue.

Many clients want to know how they can benefit their grandchildren while grandma and grandpa are still alive. One way is under the California Uniform Transfers to Minors Act. This law in California allows you to give gifts to minors under the age of a 18. The gift may be stock, mutual funds, cash, or any other asset which is then managed by a custodian on behalf of the minor. The custodian can invest the asset and add additional assets but the owner is considered the minor. The custodian can keep the assets in this custodial account until a designated age; in California the upper limit is until the child is 25 years old. At the designated age, the assets are turned over to the minor.

For example, if you want to open a custodial account for a minor grandchild and have the asset given to him at age 21, the account will be titled in the name of the custodian for the child “until the age of 21, under C.U.T.M.A.” Should the child die before the child reaches the age of 21, the asset will be part of his estate. Should the custodian predecease your grandchild before he reaches the age of 21, a successor custodian can be appointed. Often you will be choosing one of your children to act as the custodian or a trusted family friend.

Another way to benefit a grandchild is to create a trust for that child as part of your estate plan. You can specify the reasons the child would receive distributions and the ages at which the principal would be distributed. One thing you do not want to do is leave assets to your grandchildren without any type of custodial account or trust. If you do that, the minor cannot receive the gift outright and there has to be a guardianship set up for him through the probate court, something that is expensive and unnecessary if you plan ahead.

The attorneys at Scott C. Soady, A Professional Corporation can help you choose a method that fits your needs and goals for your gifts to minors. Contact us for more information or to schedule an appointment.

The estate planning attorneys at Scott C. Soady, A Professional Corporation handle not only estate planning, conservatorships, guardianships, and will and trust litigation, but also many probate matters. We receive a lot of calls from individuals who have a lot of questions about probate. Here are some the frequently asked questions about probate in California and more specifically in San Diego.

1. What is Probate? Probate is the court process in which the estate of a deceased person is inventoried, appraised, and distributed to either the beneficiaries of a will or to the heirs at law of a person who has died without a will or trust (ie. intestate).

2. Why is Probate Necessary? When someone has died, whether there will be a probate depends on whether the decedent had all of his assets in a living trust or joint tenancy. If so, then there is no necessity for probate. If a person has died with a will rather than a trust, there will have to be a probate. If the person had no estate plan, ie. no trust or his assets were not in joint tenancy or in payable on death accounts, his estate will have to go through the probate process to distribute the assets to the decedent's heirs at law. The probate procedure in the county where the individual died will see that the estate is inventoried and appraised, debts of the decedent are paid, and that the property is distributed to the proper individuals.

3. What Happens During the Probate Process? The first step in a probate is for the Court to appoint a personal representative, either someone who has been named as executor in a will, or in the case of no will, someone who petitions the Court to be the administrator of the estate. Once appointed, the personal representative will identify all the assets, usually post a bond, determine what debts need to be paid from the estate, appraise all the assets, pay any taxes due, sell any property that needs to be sold, and eventually distribute the assets to the beneficiaries or heirs. The personal representative needs to keep accurate records and usually is required to file an accounting with the Court unless an accounting is waived.

4. How Long Does Probate Take? Probate in San Diego can take anywhere from seven to eight or nine months to over a year. Part of the reason is takes so long is that there are time periods which are set by the Probate Code. Once the petition is filed to probate an estate, it can take 4 - 6 months for an administrator or executor to be appointed. Sometimes the hearing on the petition gets continued from the original date set for hearing because of “defects” in the petition which have to be corrected before the Court can rule. Sometimes other individuals besides the Petitioner want to be appointed the administrator or executor and there has to be a court hearing on who will be appointed. Once someone is appointed, notice has to be given to the deceased’s creditors who then have 4 months to file a claim. Other issues can arise which lengthens the time before probate is involved such as the number or type of assets which have to be appraised, whether the property is going to be sold, if an ongoing business is involved, or disputes between the beneficiaries or heirs.

5. How Much Does Probate Cost? The expenses of probate include fees paid to the executor or administrator, fees paid to the probate attorney, and court costs. Fees for acting as an executor or an administrator are set by the California Probate Code and are based on the gross value of the estate. Currently the fees are 4% of the first $100,000; 3% of the next $100,000; 2% of the next $800,000 and ½ % of the next $15 million. The personal representative (administrator if there is no will and executor if there is a will) are entitled to the same fees as the attorney. Court costs include filing fees, publication costs, bond cost, fee for probate referee, and recording costs.

6. How Can I Avoid Probate for My Beneficiaries or Heirs? The simplest way to avoid the probate process is to create a revocable living trust. Read more about the importance of trusts and how they avoid probate on our website. Other ways to avoid probate are to have all of your assets in joint tenancy or in assets that have designated beneficiaries upon your death.

We assist clients everyday to create an estate plan to avoid probate. We also can handle your probate matter if a loved one has died and you are the executor of their will or want to be appointed an administrator of an estate. Call us with any questions and to schedule a complimentary consultation.

Bobby Fischer, the former world chess champion, died in 2008 and yet the fight over his estate goes on. You may remember Bobby Fischer won the world chess championship in 1972 when he beat the Russian Boris Spassky in Iceland during the period of the cold war.

Fischer was born in the United States but was living in Iceland when he died in 2008 with no will. Four individuals were fighting over his probate estate, said to be worth between $2 and $3 million. Two are Fischer’s nephews Alexander and Nicholas Targ who live in California. The third is Marilyn Young who claims to have a daughter by him, named Jinky Young. Fischer had apparently been giving Jinky’s mother money for Jinky’s support and wrote postcards to the child which he signed as “Daddy.” The fourth is Miyoko Watai, a Japanese woman who married Fischer in 2004 and therefore is his widow.

To resolve the issue of the competing claims, the Court in Iceland ordered that Fischer’s body be exhumed to obtain a DNA specimen to determine if Jinky Young is in fact his daughter. Those results showed that she was not his daughter so then the contest continued between the widow Miyoko Watai and the two nephews. In March of this year, the court in Iceland ruled that his Japanese widow is his heir and entitled to his estate. The new nephews had claimed that the widow did not produce sufficient documentation that they were married and may appeal the court's ruling.

Once again these kinds of will contests occur because seemingly intelligent and knowledgeable people do not create an estate plan. This protracted litigation could have been avoided had Fischer had a will or better yet, a trust. You don't need to be wealthy to need a trust. Evem people with a small to moderate estate can benefit from a trust. A trust not only provides for the distribution of your estate upon your death but also has provisions for any periods of incapacity and provisions for the care of your minor children should something happen to you. Contact us at Scott C. Soady, A Professional Corporation to set up an appointment to get started on your estate plan.

During the time you are the appointed guardian of a minor child, you are responsible for providing
for all the personal needs of that minor such as food, shelter, education, and health needs.
Your responsibilities remain in effect until the child reaches the age of 18 or the guardianship is terminated by the Court.

You must file a Confidential Guardianship Status Report each year you are acting as guardian. The status report asks such questions as whether you have any health problems that would interfere with you continuing as a guardian, whether anyone in your household has been arrested, charged with, or convicted of a felony or a misdemeanor or any other offense involving alcohol, drugs, or sexual misconduct. You also have to report on the minor’s progress in school, his grades, activities, and any behavior problems. If the child has medical issues, those have to be disclosed and the names of all health care providers. You also should report the goals you have set for the child, whether there has been visitation by the child’s mother and father, and if the parents have financially contributed to the support of the minor.

You must notify the court of a move out of state. You must have the permission of the Court to move a child under guardianship in California to another state. A petition to fix residence out of state has to be filed with the Court who will consider whether it is in the best interests of the child to be moved out of California.

There also are restrictions on allowing the child to live with their parents or someone other than you. If you are appointed a guardian of a minor, you cannot allow the child to live somewhere else such as with their parents. You are legally responsible for the child and if the child is going to live with anyone other than you, you must seek the Court’s permission.

If you need help establishing a guardianship of a minor, the lawyers at Scott C. Soady, A Professional Corporation can guide you through the process. We also can continue to represent you after you have been appointed a guardian until your responsibilities are over either because the child has turned 18 or the guardianship has been terminated.

An ILIT is an irrevocable life insurance trust. The purpose of an ILIT is to cause life insurance death benefits to be excluded from a decedent’s taxable estate. With the usual life insurance policy owned by a decedent, the death benefits are part of the decedent’s estate and subject to estate taxes because the decedent has the power to change the beneficiary. In an ILIT, the life insurance is owned by the ILIT and therefore the death benefits are not subject to estate tax.

ILITs have been an important tool in estate planning either to remove wealth from a decedent’s estate thereby reducing estate taxes and in situations where a decedent wants to provide cash to his beneficiaries to pay estate taxes.

With an ILIT, the individual or married couple creates an irrevocable trust and funds the trust with an insurance policy. If certain requirements are met, the proceeds from the life insurance policy upon death are removed from the decedent’s taxable estate. The decedent during his life can make a yearly tax free gift to cover the cost of the insurance premium. One of the differences between an ILIT and a revocable living trust is that the ILIT is irrevocable and the trustee cannot be the trustor/decedent or the beneficiaries. The trustee must be independent, usually a trusted family friend, private professional fiduciary, or a financial institution.

The new 2010 Tax Act which now is in effect until the end of 2012, provides for a $5 million estate tax exemption. $5 million is the highest estate tax exemption this country has seen. This means that the beneficiaries of a single person whose estate is less than $5 million, will not have to pay estate taxes. For a married couple this means that for a couple whose wealth does not exceed $10 million, no estate taxes will be due. In years past when the exemption was $1 million, for example, ILITs made a great deal of sense but with the exemption now at $5 million, do ILITs still make sense?

If you are an individual who is going to have a taxable estate even if the exemption remains at $5 million, then an ILIT may still be a good plan. On the other hand, if your estate is presently not likely to be subject to estate taxes upon your death, maybe the next two years will determine whether an ILIT is an estate planning tool you should consider. For now, the best approach may be a wait and see approach.

If you have questions about whether an ILIT should be part of your estate plan, call the estate planning lawyers at Scott C. Soady, A Professional Corporation. We would be happy to answer any questions about ILITs or other estate planning questions. Your initial in-office consultation is always complimentary.

National Women's Health Week is a weeklong health observance coordinated by the U.S. Dept. of Heath and Human Services Office on Women's Health. It runs from May 8 - May 14 and encourages women to take steps to improve their physical and mental health.

The theme this year is "It's Your Time!" Some of the steps recommended for better health are getting at least 2 1/2 hours of moderate physical activity, 1 1/4 hour of vigorous physical activity, or a combination of both each week; eating a nutritious diet; visit your health care provider to receive regular checkups and preventive screenings; avoid risky behavior such as smoking and not wearing a seatbelt; and paying attention to your mental health, including getting enough sleep and managing stress.

These are great steps toward physical and mental health but what about also focusing on your financial health this week. If you are like most women, you are raising or raised your children, building a career or thinking about retirement, caring for your elderly parents, etc. Since women outlive men by 5 years and 2/3 of Americans over 85 are women, women need to be thinking about the steps they can take to improve their financial health as well as their physical and mental health. Women can overlook the need to be proactive to set financial goals, to address issues of incapacity, and to make an estate plan, leaving the decisions to their spouse, children, or worse, a judge.

Some of the aspects of financial health you should consider are:
1. Have you named guardians for your minor children? Nomination of guardians for your minor children can be made in your will or in a separate document.
2. Have you named agents to assist with finances of health care decisions if you become incapacitated? In California these documents would be a Durable Power of Attorney for Finances and an Advance Health Care Directive.
3. Have you considered life insurance, particularly if you are a single mother?
4. Have you prepared a will or a trust that will designate how you want your estate to be distributed upon your death?
5. Have you planned for your retirement?
6. Are you living within your means and have some cash tucked away?

Don't wait any longer to take steps to improve your physical health, mental health, AND your financial health. At Scott C. Soady, A Professional Corporation, we can help with the estate planning aspects of financial health. Contact us for a complimentary consultation.

Petitioning the probate court to be appointed the conservator of someone’s person or estate may be necessary when an individual has become legally incapable of taking care of himself or unable to handle his finances, and has not created a durable power of attorney for finances. The majority of the time, conservatorships are not contested and granted upon a showing to the court that the proposed conservatee is incapacitated and unable to manage their personal or financial affairs. Sometimes, however, conservatorships are contested.

Family members may disagree as to who should be the conservator. Sometimes the proposed conservatee has a lawyer and wants to contest the granting of the conservatorship. Other times the contest arises simply because of miscommunication among family members who may not understand what it means for an individual to be conserved.

Contested guardianships are similar to conservatorships in the sense that the majority of the time they are not contested. Like conservatorships, family members can fight about who would be the best guardian for minors who have lost their parents or minors whose parents cannot take care of them. If there is no agreement, then a trial may become necessary before a probate judge.

Both contested conservatorships and contested guardianships can be emotional and sometimes embarrassing when they play out in a courtroom. The courtroom can be a battleground for the “he said- she said” and avenging of perceived wrongs, whether large, small, real, or imagined. Often there is not a “winner.” The judge will determine who should be the conservator or guardian but no one comes out a “winner” when the family has to go through such turmoil.

Both of these types of cases often can be resolved with mediation. Mediation provides an opportunity for all parties to express their opinions, feelings, etc. and a mediator can often guide the parties to remember that the real issue is the welfare of the conservatee or the minor. Mediation is not done in a courtroom but in a neutral setting, usually the mediator’s office. It is voluntary and confidential with the goal being for all parties to express themselves and resolve the conflict between them.

The estate planning lawyers at Scott C. Soady, A Professional Corporation can assist you with your contested conservatorship or guardianship matter, whether it be through mediation or a trial in the probate court. Call us if you would like to schedule a complimentary consultation.