Estate Planning

In California, if someone dies without an estate plan, their assets are distributed according to state’s laws of intestacy through a court supervised process called probate. This is good news for those who never took the time to consult with an attorney and passed away prior to creating a valid estate plan. However, many times the laws of intestacy do not follow what the individual or couple would have chosen for their plan. Additionally, the probate process is public and comes with additional costs including court fees and statutory attorneys’ fees established under the laws of California. The probate process typically takes a longer time than a properly executed estate plan and can take 9-12 months (and in some cases more) to complete. In more complex probates it is common for additional attorneys’ fees to be awarded. Consulting with an attorney about an estate plan can ensure that your post-death wishes will be followed while simultaneously avoiding the sometimes costly, time-consuming, and public probate process.

The typical estate plan consists of a trust, a pour-over will, power of attorney, and an advanced health care directive.

Trusts

The trust document is the most typical estate planning document to ensure your estate is passed on to your chosen beneficiaries after you pass. Typically, the trust creator (“settlor” or “trust-maker”) is also the initial trustee (manager) of the trust and can maintain control of the trust assets until their death. In the event that the trust-maker(s) become incapacitated due to illness or a cognitive condition, the trust can dictate who would manage the trust until the death of the trust-maker(s). Typically, the trust becomes irrevocable upon the death of the trust-maker and the trust assets are immediately distributed to the trust-maker’s chosen beneficiaries. However, if properly drafted, the trust can continue to be effective after the death of the trust-maker. Other advantages of trusts are that they can be used to protect assets from creditors and can provide certain tax advantages for the creator and his/her beneficiaries.

Wills

Typically, a proper estate plan will include what is called a pour-over will. The purpose of the pour-over will is to ensure that assets owned by the trust-maker that were never properly transferred to the trust can be included in the trust and distributed to the chosen trust beneficiaries. However, it is always best for the trust to be properly funded with all your assets, as using a pour-over will to transfer assets into your trust after your death will likely result in the need to file a petition in probate court. This would cost the estate unnecessary costs with potentially significant attorneys’ fees. Mr. Call can assist with properly funding your trust so that filing a petition in probate court upon your death is unnecessary.

Powers Of Attorney

A power of attorney is a document that gives a person of your choosing (“attorney-in-fact”) the legal power to act for you. The powers granted to the attorney-in-fact are dependent on the powers listed in the document and can be either broad or narrow in focus. The power of attorney can be drafted to become effective immediately or at a later date, such as when the creator of the power of attorney (“principal”) becomes incapacitated. Powers of attorney terminate upon the death of the principal but can also be drafted to terminate upon the happening of a certain event or condition such as the principal’s incapacity. It is important to speak with an attorney to determine what types of powers should be included in your power of attorney document, when it should become effective, and when it should terminate.

Advance Health Care Directives

If you are like most people, you have certain wishes about the type of medical treatment you receive in the event you become incapacitated due to an accident, medical condition, or old age. The advance health care directive (“advance directive”) specifies who will make medical decisions for you and communicate these decisions to your physicians. The advance directive can also set forth whether or not you wish your life to be prolonged if you were unable to communicate and had no reasonable chance of recovery from a life-threatening injury or condition. These sorts of decisions are very personal and should be clearly described by your attorney in the advance directive so that your wishes are specifically followed. An authorization to your medical providers should also be included with your advance directive. This ensures that the person you choose to make decisions for you has access to your medical information and that your physician will communicate with that person.

Probate

Losing a loved one is always difficult. If the decedent (deceased person) did not create an estate plan (died without a valid trust) in California, their estate needs to be probated. Trying to figure out how to probate an estate can add to the stress and grief that usually accompanies the death of a loved one and can result in unnecessary delays in probating and distributing the estate. It can also be confusing for those not accustomed to the process.

The first step in probating an estate is usually to appoint an executor of the estate. The proposed executor will need to petition the court to be appointed and give notice to the heirs of the decedent. Once the executor is appointed, the person essentially acts as a trustee (manager) of a trust would act. The executor is responsible for providing an inventory of all assets and creditors of the estate and must give notice to all interested parties. There are statutory timelines in which the executor must prepare certain documents and any mismanagement of the estate can subject the executor to lawsuits for breach of their fiduciary duty. Because of the many steps involved with probating an estate as well as the potential for lawsuits if the probate is not handled appropriately, it is always best to have an experienced attorney on your side to assist with the administration of the decedent’s estate.

Fees payable to the executor and his/her attorney are set by statute. However, if the probate is complex, the court may award additional “extraordinary fees” based on any additional work done in probating the estate.

Trust Administration

When a loved one has taken the time to create a trust, the administration and distribution of the estate is typically set by the trust document (with other California laws regarding trusts). If drafted properly, the trust should name the person who is in charge of managing and distributing the estate (“successor trustee” or “trustee”). If you are named in the trust as the successor trustee, you have certain fiduciary duties and you must follow the terms of the trust for the benefit of the estate and beneficiaries. One of these duties is to keep the beneficiaries informed of the trust and the trust administration. Another important duty is the duty of accounting for the trust. This includes making a list of all assets in the trust at the date of death of the trust-maker (“settlor”), all assets owed to the trust, all trust expenditures, and all distributions from the trust. Depending on the size of the estate, this can be a time-consuming and stressful job for the trustee, especially if the trustee is still dealing with the grief from the loss of a loved one. It is important that the successor trustee obeys all of their duties in administering the trust, as not doing so can result in litigation between family members. Litigation can sometimes get very personal in this field of law and it is best to avoid it if possible. Many times, litigation can easily be avoided by the proper handling of the trust. For these reasons, it is wise to consult an attorney for assistance in administering the trust.

Beneficiaries of a trust also need to pay attention to the trust administration to ensure that it is being handled properly. As noted above, trust litigation can get very personal and sometimes it can destroy family relationships. Hiring an experienced trust attorney can help to ensure that the trust is managed properly and that you receive what you are entitled to as a beneficiary of a trust.

Probate Litigation

Probate is the process of distributing a deceased person’s (“decedent”) estate if the person had a will or died without any estate plan at all (died “intestate”). If a person dies intestate, then the distribution of their estate is set by statute and depends on the marital status of the individual and the number of children and/or relatives of the decedent. Probate litigation regularly arises between the estate and heirs, beneficiaries, creditors and omitted children and spouses. Another typical issue that arises in this area is when a beneficiary claims that the executor of the probate estate has breached a fiduciary duty and that breach impacts or will impact that person’s distribution from the estate.

Another common area of probate litigation is when someone contests a will. These “will contests” typically claim that someone unduly influenced (“undue influence”) the decedent when he/she created the will, that the person who created the will did not have the requisite testamentary (mental) capacity to create a will, or that the statutory formalities in creating a will were not met.

It is important to have an experienced attorney on your side if you wish to file a lawsuit or if a lawsuit has been filed against you. Prior to filing a lawsuit, your attorney should discuss the strengths and weaknesses of your potential claim as well as what you and/or the estate stand to gain (or lose) in filing or fighting a claim.

Trust Litigation

Trust litigation results when a person either challenges the validity of a trust or claims that the trustee (trust manager) violated his/her fiduciary duties in managing the trust. In challenging the validity of a trust, the typical claims are that someone unduly influenced the trust-maker (“settlor”) or that the settlor lacked the requisite testamentary (mental) capacity to create a valid trust. A person can also seek to invalidate the trust claiming that the statutory formalities in creating the trust were not met.

Often the reason for trust litigation is due to the trustee not complying with their fiduciary duties to the beneficiaries. A petition can also be brought if the trustee’s actions violate the terms and/or purpose of the trust. A trustee has certain duties in administering the trust including keeping the beneficiaries informed of the trust assets and accounting for the income to and distributions from the trust. When the trustee fails to properly administer the trust it can be crucial to seek the advice of an attorney quickly, as trust assets can potentially become unrecoverable.

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