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Nine Things Women Should Know - Estate Planning for Women

Posted on | June 30, 2010 | No Comments

“Women’s life expectancy, combined with their tendency to marry older mates and their lower lifetime earnings means they are far more likely to see their living standards compromised in retirement if proper estate planning isn’t done.” This statement begins a very savvy column in an article titled “Six Estate Planning Questions for Women” by Deborah Jacobs for Forbes Magazine. Generally, women enjoy a longer life expectancy than men, which leaves them vulnerable if they fail to make a plan. In my own practice, it is not uncommon to see many women alone in their final years. Beyond that harsh reality, even with supportive family members and friends, the issue becomes not what you want to do with your estate, but rather who will make decisions for you if you fall ill or are unable to make decisions on your own behalf because of an accident or progressive disease.

If you do not make your choice and formalize it via a medical power of attorney (called an advance health care directive in California – see “What is a Living Will? California’s Advance Health Care Directive”), then the government will make the decision through a long and protracted process called a conservatorship. Conservatorships are not fair to your friends and family because of the prohibitive cost and publicity that is attendant to them, and those same people will be placed in the position of having to guess what you would have wanted should you have made your wishes known. Furthermore, you may rebel at the very notion of a conservatorship and may have to hire a lawyer to defend you during the process.

On the other hand, an advance health care directive will only manage personal care decisions for you –leaving perhaps the most important choices regarding your money to your agent through a financial power of attorney. The issue can occur like this: you are involved in an accident and are hospitalized for a month, unable to make decisions on your behalf. Your mortgage or rent becomes due and you have no one authorized to pay it on your behalf. Now you become entangled in a messy legal scenario in which someone must first petition the government on your behalf – usually through an ex parte temporary conservatorship legal procedure – to pay your bills to avoid foreclosure or eviction. All of that is unneeded if you have someone selected as your financial power of attorney. If drafted the right way, that power of attorney will only become effective should you become incapacitated (called a “springing” power of attorney  - see “What is a Springing Power of Attorney?“). To learn more about who to select and other matters on this topic, the article has a nice section under the section “Whom can you trust?”  My thanks to Professor Beyer for bringing this article to my attention.

Category: Estate Planning - Generally
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The Reading of the Will – When, Why and Who Should Be There?

Posted on | April 30, 2010 | No Comments

That’s really a trick question. Although made famous in various movies, television shows, and books, probate and estate planning attorneys no longer (if they ever did) orally read the contents of estate planning documents to family members. They are primarily tasked with finding beneficiaries and heirs of a will and sending them a copy of the document. In fact, wills are an outdated form of estate planning and are generally discouraged from use (See “What Are the Advantages of a Trust?”). This does not make those scenes any less funny – as epitomized by this will reading from the television show 30 Rock.

Thanks to Joel A. Schoenmeyer for bringing this clip to my attention.

Category: Estate Administration
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The Estate Tax Will Not Dissappear Under Obama

Posted on | January 15, 2009 | No Comments

The Wall Street Journal is reporting that Barack Obama will block the disappearance of the estate tax in 2010. It is being reported that the Senate Finance Committee will reverse the rollbacks that were being phased in slowly since 2001. As reported earlier on this blog, the Obama campaign plan would exempt estates worth up to $3.5 million with the remainder taxed at 45%. The majority of estates – up to 98% - will pass without being taxed.

Category: Estate Tax
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“Will I Inherit from My Parents if I Kill Them?” California Slayer Statute - A Common Sense Answer

Posted on | September 9, 2008 | No Comments

A lot can hang in the balance upon the death of a person. Although not every family murder is driven by a large inheritance, it has happened enough that a general rule of law has formed to prevent the person from benefiting from the crime. Not only has the rule of law been postulated by various United States courts, it has also been codified into statute in almost every jurisdiction. The following rule is part of a larger statutory system designed to prevent those who commit crimes from profiting from them.

The California Probate Code states that a person who “feloniously and intentionally kills the decedent is not entitled” to “any property, interest, or benefit under a will of the decedent, or a trust created by or for the benefit of the decedent in which the decedent has an interest, including any general or special power of appointment conferred by the will or trust on the killer and any nomination of the killer as executor, trustee, guardian, or conservator or custodian made by the will or trust.” California Probate Code § 250.

Category: Probate, Probate Litigation, Wills and Trusts
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Why You Need A Guardian and How to Choose a Guardian

Posted on | September 8, 2008 | No Comments

Many parents do not realize that if circumstances suddenly change, as in unforeseen death, incapacity, or some other circumstance prevents their ability to care for their children, a legal guardianship process will be instituted in which a caregiver is selected by a California probate court. For example, if a parent were arrested while her child was staying at a friend’s house, those other parents would not be able to prove that they had legal custody of the child. The police would then contact Child Protective Services, who would take custody of the child until someone could be found with the documented legal authority to care for the children. This could result in the child being placed in foster care until the issue is resolved by the probate court.

At court, each family member will have equal priority in determining who will become a guardian, even if your wish is that a reliable friend of the family take care of the children. All of us have family members that are not favorable candidates for raising children – yet those same family members may have that responsibility, even if it is against your wishes. Nobody likes to contemplate both parents dying simultaneously in a car accident, but if you fail to plan accordingly, your children’s future could be adversely impacted.

Some advice on how to choose a guardian can be found here, and include the following questions:

    Whose parenting style, values, and religious beliefs most closely match your own?
    Who is most able to take on the responsibility of a caring for a child — emotionally, financially, physically, etc.?
    Who does your child feel comfortable with already?
    Will your child have to move far away, and will that pose any problems?
    Does the person you’re considering have other children? If so, would your child fit in or get lost in the shuffle?
    Does the person have enough time and energy to devote to your child?

After you have made your decision, you must discuss the decision with the guardian, so that you can gauge that person’s willingness to perform the role. After selection, you must memorialize it in a legal document such as a will or trust. If you have life insurance or an estate, you can divide the duties between a guardian of the person and a guardian of the estate. Trusts are especially well suited to limiting the disbursements to children – such as providing only for the child’s health, welfare and education – while also protecting the assets in the trusts from the child’s creditors (what is called a “Spendthrift Trust”).

Category: Estate Planning - Generally, Probate, Probate Litigation, Trusts, Wills, Wills and Trusts
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What is a Guardianship? California Guardianships In San Diego Probate Court

Posted on | September 7, 2008 | No Comments

A guardianship is appointed for juveniles whose parents cannot take care of their children anymore for any number of reasons, such as a physical illness, military deployment, drug or alcohol problems, or child neglect. In California, there are two types of guardianships, each of which is handled by the San Diego Probate Court.

Probate Guardianship of the Person: A guardian of the person is responsible for meeting the child’s basic needs, including protecting and safeguarding the child, and providing food, clothing, and shelter – as well as medical care and education.

Probate Guardianship of the Estate: A guardian of the estate may typically be provided for when a child has inherited a large sum of money or property from a deceased parent.The guardian will manage the child’s financial affairs until the child reaches the age of majority (18 years), and in many cases the surviving parent will assume the role.

Probate guardianships do not terminate the parental relationship, but may end when the parent can resume taking care of the child. Anyone may petition the court to be appointed as a legal guardian, such as an aunt, uncle, grandparent or friend of the family. Some parents may be surprised to learn that their child can petition the court to appoint a guardian. In addition, a parent can name a guardian for their children in the case of premature death by will, or if the parent has a terminal illness. In the latter case, the court may appoint a joint guardianship, so that the guardian may provide for the child while the parent is still alive, and then take full custody upon that parent’s death without further hearing.

Category: Estate Planning - Generally, Probate, Wills
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California Estate Planning - Irrevocable Life Insurance Trusts - How Much Life Insurance Do I Need?

Posted on | August 28, 2008 | No Comments

The better question might be what to do with the life insurance after you have purchased it. But more on that later. For now, the simple answer is that you should only spend what you can afford to pay, provided that the amount may sustain your family. In purchasing life insurance, the amount should reflect burial expenses, the number of years your family will need to be sustained, the annual net (after tax) income your survivors will need, the number of children (and their respective ages) planning to go to college, and other expenses such as new cars, weddings, home improvements and mortgage payments.

Thankfully, you do not need to do the calculations on your own, but several online calculators are available. It is probably best to choose the calculator wisely, and do the basic research into life insurance amount before you begin placing calls. One calculator that appears to be neutral (not sponsored by one of the many life insurance companies) is located on MSN Money.

Life insurance may present problems for your estate. It may increase the size of your taxable estate, thus leaving less to your beneficiaries and more to the federal government. The beneficiaries of the policy may be may be immature and unable to administer the funds properly on their own. Placing the life insurance policy in an irrevocable life insurance trust can decrease the size of your estate for tax purposes; allow a trustee to administer the funds properly to beneficiaries who might spend it unwisely; and break the lump sum into manageable payments. Trusts give the settlor the power to shape the distribution of life insurance proceeds from beyond the grave, and are a powerful method of estate planning in California.

Category: Trusts
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