Category: Wills and Trusts

Many people have a goal of leaving some of their money to charitable or philanthropic organizations through their will or trust. Charitable remainder trusts make it possible for a person to give to the charitable organizations they choose during their lifetime while still having access to needed assets.  

If set up properly, a charitable remainder trust can give you the best of both worlds. You should work with a California trusts attorney to create a charitable remainder trust that complies with all the state and federal regulations and creates the desired benefits, like tax savings. A lawyer can help you understand how to use a charitable remainder trust in your estate planning.

An Overview of Charitable Remainder Trusts

With a charitable remainder trust, you or your chosen lifetime beneficiary may have access to your assets and can use them as you see fit during your lifetime, or the beneficiary’s lifetime, even though the assets are transferred into the trust. Your designated charitable beneficiary will receive some or all of the trust assets after you die. Your trust will specify the terms. 

It is possible to set up a charitable remainder trust to benefit a non-charitable beneficiary for the rest of their lifetime, with the remainder of the trust assets going to your designated charitable recipient after the death of the non-charitable beneficiary. In other words, you could set up the trust so that your surviving spouse, child, friend or family member, or some other person receives benefits from the trust for the rest of their lifetime, with the charity receiving the assets that remain upon the death of that person.

Your selection of trustees for a charitable remainder trust is a crucial decision. These trusts are more sophisticated and complicated to administer than a simple living trust. Many people appoint a professional fiduciary, trust company, or financial institution to serve as the trustee for their charitable remainder trust. The risk of appointing a non-professional to serve as the trustee for a charitable remainder trust is that if the trustee does not comply with state or federal regulations, the trust could become invalid and lose its tax savings and other benefits. 

How Charitable Remainder Trusts Are Different from Charitable Lead Trusts

There are two primary types of charitable trusts in California, the charitable remainder trust and the charitable lead trust. We have already discussed how charitable remainder trusts work. Charitable lead trusts are different in that the charity receives benefits first, for a period of years, and then the people you choose receive the remainder of the trust assets when the period expires.

Let’s say that you want to set up a charitable lead trust to pay a specified portion of the trust assets to a specific charity, like 10 percent of the assets annually to the charity for three years. At the end of the three years, called the lead period, the assets that remain in the trust would get distributed to the beneficiaries you chose, like your children or your surviving spouse, in the trust document. If you are considering setting up a charitable remainder trust or some other type of living trust, you should work with a California estate planning attorney to help create an estate planning document that meets your goals and needs. Contact our office today for help with your case.

If you are considering putting your assets in a trust, you may wonder which type of trust can best safeguard your assets against creditors. While there are many types of trusts, the two most common trust forms are “revocable” and “irrevocable” trusts. Our California trust attorney can help you determine which type of trust best suits your needs and goals.    

What Is a Revocable Trust?

A revocable trust is a legal entity where you can place your assets while you are alive and maintain some control over them. The beneficiaries of a revocable trust do not have access to the assets of a trust until your passing. This is a common type of estate planning tool because it takes assets out of the probate process and lets you pre-determine what happens to them when you die.

The creator of a trust can also be its trustee and manage the assets. A person can change the beneficiaries, remove or add property to the trust or even sell or gift trust property. You will name yourself the trustee when you create a typical revocable living trust to avoid probate.

Because of a person’s retained control over the assets of a revocable trust, this is not a way for you to shield assets from your creditors. In addition, income or wealth generated by the revocable trust counts as personal income, and you will be responsible for any taxes. This can be good in some scenarios, as individual income tax rates are usually lower than trust income tax rates for comparable income brackets. But, for others, the tax consequences may be more significant.

What Is an Irrevocable Trust? 

An irrevocable trust is a legal entity that can also be created during a person’s lifetime and be used for estate planning purposes to avoid probate. However, once a person transfers property or assets to an irrevocable trust, they cannot reverse this decision, and the property is no longer within that person’s control. In many scenarios, the person who funds or creates the trust will also be unable to make decisions related to the trust. 

However, the creator will have the right to choose the trustee of the trust when it is created. While this person cannot be the trust creator, it can be someone you trust. This is a serious decision requiring much thought, as getting the trustee changed or removed is not always so simple.

Some significant benefits of an irrevocable trust are that it can be a great way to limit estate taxes or protect assets from creditors. These creditors include ordinary creditors and others, such as the state of California’s Medicaid program, also known as Medi-Cal. An irrevocable trust may be a good choice for persons who are aging and facing the possibility of needing Medi-Cal to pay for their long-term care, persons who are subject to increased professional liability, or beneficiaries who have special needs or disabilities and want to avoid becoming ineligible for government benefits.

Types of Trusts

Many types of trusts may be available to you. Some irrevocable options that may fulfill a person’s goals of shielding assets from creditors include the following:

• Special Needs Trusts (sometimes identified as Supplemental Needs Trusts)
• Irrevocable Life insurance trust
• Qualified Personal Residence Trust
• Grantor Retained Trust

This is only a partial list of all the options for trusts that may be available to you. Forming a trust is a serious undertaking and should only be done after consulting with an experienced attorney.

Consult With an Attorney

If you are considering creating a trust to protect your assets from creditors, our attorney is here to help. The California Trust Law is complex and can be confusing. We offer a free initial consultation and a personalized estate and trust planning approach. Contact us today.

Many people wonder why they shouldn’t prepare their own will. After all, websites abound with “free” legal advice, and it’s easy to get forms and templates off the internet. While it may seem simple and less expensive to DIY your will, drafting mistakes or document execution issues can have serious consequences. 

Consequences may include a court not treating your will as valid. If a court does not accept your DIY will, you and your heirs may be treated as if you passed away “intestate.” Working with a California wills lawyer can help you avoid these issues and give you peace of mind.

Things to Consider Before You Prepare Your Own Will

California, like all states, has unique requirements for a will to be legal and valid:

• A person must be a legal adult, at least 18 years old, when they sign the will
• A handwritten will must be signed and dated by its author 
• A printed or typed will must be signed by the author and witnessed by two people not receiving anything in the will

Many DIY wills fail to meet these requirements and may be deemed invalid despite the drafter’s best intentions. For example, California has stringent requirements regarding witnesses. If a typed will doesn’t have the signature of two witnesses who viewed a person sign it, it may be found invalid.

The wrong wording in a DIY will can also drastically change the meaning of the will and lead to unwanted results. Incorrect language can result in the wrong relative receiving portions of your estate or cutting people out you did not intend to omit.

You may also make choices in your DIY will that can negatively impact someone else’s life, despite your best intentions. If you have an heir with special needs who receives government assistance, receipt of an inheritance can cause them to lose their benefits. They may be forced to spend what you leave them to regain their benefits or hire a lawyer to help them deal with their potential loss of benefits.

Working with an attorney to evaluate any particular circumstances you need to consider can be worth the investment.

What Happens if Your DIY Will Is Considered Invalid? 

If your will is deemed invalid, a court will decide what should happen to your assets and belongings. This means California law will determine who inherits your estate according to specific default rules. These rules can result in unintended consequences. For example, if you have no children but are not on good terms with parents or siblings, they may inherit items you would have wanted to give to friends or other loved ones.

Consult With an Attorney

Get in touch with our office today for a free consultation if you have questions about preparing a will or how estate planning works.

Whenever there is money involved, there can be conflict. Trust disputes happen when people are not happy with the terms of the trust or how the trustee carries out the duties of the position. Sometimes the person objecting to the trust has a legitimate complaint. Some people challenge trusts hoping to get “free money” or make things difficult for the trust beneficiaries. A California trust attorney can advise you on whether you have a valid case against a trust and explain how trust disputes arise.

Complaints Against the Trustee

One of the most frequent sources of trust disputes is that the trustee does not perform the duties properly. The trustee has a fiduciary duty to act in the best interests of the trust beneficiaries. If the trustee puts his own interests ahead of the beneficiaries, he violates the fiduciary duty.

When you set up your trust, you should exercise extreme caution when selecting the trustee. People often choose a trustee because of personal feelings rather than an unbiased assessment of that person’s appropriateness for the position.

You might want to reconsider naming someone to serve as the trustee of your trust if any of these factors are true about the person:

• Has ever filed bankruptcy
• Causes you any doubts about his honesty, integrity, or character
• Has a conviction for any crime involving fraud, theft, or a related offense
• Has addiction or mental health issues
• Dislikes any of the beneficiaries
• Does not have financial stability
• Has a history of making unwise investments or has little experience handling large sums of money and assets

It is always better to avoid a problem than to try to repair the damage afterward. You do not have to name a friend or family member to serve as the trustee. You could have a professional person or company serve as the trustee, like an accountant, attorney, or trust department of a bank. It is better to pay fees to a professional who will do the job right than to have your loved ones lose everything you left to them because the trustee breached the fiduciary.

Allegations that the Settlor Did Not Have Legal Capacity

When a person of advance years or cognitive impairment from Alzheimer’s disease or some other cause creates a trust or makes significant changes to a trust agreement, there will likely be allegations that the settlor (the person whose assets went into the trust) did not have the legal capacity to write or modify the legal document. Often, accusations that someone unduly influenced the settlor will accompany the “lack of capacity” challenge to the trust.

One way to avoid this issue or defend against such claims is to get a cognitive assessment from your doctor at the time that you make or change the terms of your trust. Make sure that your lawyer has the letter from the doctor that says you were competent at that time. 

Rolling the Dice

A person with nothing to lose might dispute a trust on the chance that the judge will award him something or the trustee will offer him money to dismiss the challenge. Even if you are upset with someone who might expect to inherit from you, like one of your adult children, you might want to consider leaving enough assets to this person to make him think twice about challenging the trust.

Contact our office today. A California trust attorney can talk with you about your family dynamics and help you develop a strategy to protect your loved ones and your estate.

If you have a living trust, or are considering getting a living trust in California, you might wonder what may happen to your trust after you pass on. You’ll probably want to know if someone can come along and challenge the trust — possibly getting a judge to set it aside, or causing your survivors to settle for less than you intended them to have. A California estate planning attorney can talk to you about specific trust contest problems that the beneficiaries of your assets might face. 

A trust contest happens when an heir,  beneficiary or other interested person asks a court to change the terms of a trust, or to throw out a trust, to ensure that the contestant will receive more assets from a friend, relative, or loved one’s trust agreement. Often the challenger was previously a legal heir to a larger share of the assets, or a beneficiary who had a larger share of the assets under a prior trust,  but will receive a smaller portion under the most recent version of the document.

Here are some of the more common reasons that people challenge a trust:

Capacity

You must be at least 18 years old to sign a trust agreement, but there is no age that is automatically too old to create a trust. The law generally presumes that adults are of sound mind, but certain facts can cast a shadow of doubt on a person’s legal capacity to understand who their natural heirs are and the legal ramifications of signing a trust agreement.

For example, there might be questions about capacity if the person who creates or changes a trust:

• Has an official diagnosis of Alzheimer’s disease or another form of dementia. It is often best to have a medical authority certify that the person has legal capacity at the time that he or she signed the original or amended trust.
• Has a mental illness. A mental health practitioner may determine and certify whether the individual had legal capacity when he or she signed the papers.
• Is quite aged. For example, if your great-aunt is 104 years old, it may help her in some cases to have a medical expert evaluate and certify her capacity. 

It is often better to memorialize the mental state of the person to avoid problems down the road.  But you should consult with an experienced estate planning attorney before taking any action concerning an elder’s trust or other estate planning documents.

Undue Influence or Coercion

Unfortunately, some people use others for their own benefit. If someone exerts undue influence on a vulnerable person who makes a trust, and obtains a benefit from that undue influence, a judge can later set aside the trust on the grounds of undue influence because, but for the improper conduct, the person would not have signed a document with those terms.

Coercion (sometimes referred to as duress or menace) happens when someone threatens, bullies, or intimidates another person to cut a beneficiary out of a trust, reduce the person’s share, or give assets to an individual through the trust. Similar to undue influence, coercion involves depriving the person signing the document of his or her unfettered free will.

Fraud or Forgery

It is fraud when someone deceives another person into signing a trust instrument. The signer might be misled to believe, for example, that the document is something other than a trust, like an insurance form. Also, fraud can happen when someone tricks the signer into changing the terms of a trust based on false or misleading information, such as misleading the signer to believe that his sole heir, such as a child, is dead, or by falsely asserting that the child abused or abandoned the signer. 

Fraud can be a crime, such as when a document is forged. Forgery is when someone fabricates or alters a document, for example, typing up a trust agreement and forging someone else’s signature on the papers. If you can prove fraud, a judge can void the trust.

A California estate planning attorney can explain your options for protecting your estate from a frivolous trust challenge. You set up your trust and estate planning documents to provide for your loved ones. Contact us today for a consultation. You do not want someone to be able to countermand your wishes and take away the assets you planned to give to your beneficiaries.

A beneficiary is a person or legal entity designated to receive assets from a trust or estate. Beneficiaries receive property or liquid assets after a person’s death or according to the terms of a trust. As a beneficiary, you have certain rights. If you believe your rights as a beneficiary were violated, you should talk with a California estate-planning attorney about your legal options.

Who Notifies Me That I Am a Beneficiary of a Trust?

A trustee is required by law to notify beneficiaries of a trust upon the settlor’s death. The settlor is the person who created the trust. The trustee has 60 days from the settlor’s death to provide the notification to the beneficiaries. The notification by the trustee must contain:

• The settlor’s identity
• The trust’s formation date
• The name, address, and telephone number of the trustee
• The address of the physical location where the trust is administered
• Any other information that the trust requires the trustee to provide to beneficiaries
• Notification that the beneficiary is entitled to a complete copy of the terms of the trust upon reasonable request to the trustee

If a trustee refuses to produce a copy of the terms of the trust or you believe the copy of the terms is not accurate and complete, you should contact an attorney immediately. The time to contest the trust is generally limited to 120 days from the date of the notification from the trustee, if the trustee includes a copy of the trust with the notice.

What Happens if the Trustee Does Not Notify Me?

Upon the filing of a will with the probate court, the will becomes a matter of public record. You can obtain a copy of the full will from the court. 

California Probate Code §8200 generally requires the custodian of a will to deliver the will to the superior court for the county in which the decedent resided within 30 days after the person’s death. If the custodian is not the executor or personal representative named in the will, the custodian is also required to deliver a copy of the will to the executor or personal representative named in the will. If the personal representative’s whereabouts are unknown to the custodian, the custodian is required to give a copy of the will to a beneficiary named in the will, if the whereabouts of the beneficiaries are known to the custodian.

If a custodian refuses to file the will with the court, you can file a petition with the court demanding that the custodian produce the will. 

Contact a California Estate-Planning Attorney for Help

Estate and trust matters can be complicated. Deadlines for filing contests and other petitions may be short. It is best to consult a California estate-planning attorney as soon as possible if you believe you are being denied information or property that your are entitled to receive as a beneficiary of a trust or estate. Talk with our California estate planning attorneys today.

As a beneficiary of a trust agreement, you have certain rights by law. The trust agreement may also give you rights as a beneficiary. Because you may receive significant benefits from the trust, it makes sense to know and understand your rights as a beneficiary. A California beneficiary rights attorney can help you protect your rights as a trust beneficiary, including contacting the trustee on your behalf to resolve issues directly or by filing a lawsuit with the court seeking resolution of a matter related to the trust or its administration.

1.  You have the right to receive notice of the trust and the property held by the trust.

As a beneficiary, you have the right to review a copy of the trust once the vestment of your rights under the trust occurs. Your rights in a trust become vested with the trust becomes irrevocable. A trust can be created as an irrevocable trust while other trusts become irrevocable upon the death of the grantor or another qualifying event. When you receive a copy of the trust, read the entire trust. If you do not understand any of the terms of the trust, contact an attorney for assistance. You need to understand the provisions of the trust to know whether your rights are being violated.

2.  You have the right to receive an annual accounting from the trustee.

Each year, the trustee must provide the trust beneficiaries with an accounting pursuant to trust laws in California. The terms of the trust agreement cannot waive or restrict the duty of the trustee to provide annual accounting. Beneficiaries are also entitled to an accounting from the trustee upon termination of the trust or when a new trustee assumes management of the trust.

3.  The accounting must contain certain details regarding trust property.

The annual accounting by the trustee must satisfy the legal requirements for a trust accounting record. For example, the trustee must include information related to expenses incurred by the trust during the year. The trustee must also account for any trust property sold, transferred, or distributed during the year. The beneficiaries also have the right to know what property the trust still holds.

4.  You have the right to petition the court for assistance.

If a trustee fails to perform his or her duties or breaches the fiduciary duty owed to beneficiaries of the trust, you have the right to petition the court to ask the court to intervene. The court may require the trustee to account for various actions and property. Depending on the outcome of the case, the court may remove the trustee and order the trustee to reimburse the trust for value lost because of the trustee’s breach of duty or other wrongdoing.

Contact a California Estate-Planning Attorney for More Information

The terms of the trust agreement impact your rights as a beneficiary. Trust agreements are complicated documents. A California estate-planning attorney can review the trust to determine your rights as a beneficiary under the trust agreement and pursuant to California trust law. If your beneficiary rights have been violated, the attorney can explain the various legal options available, including trust litigation, to resolve the matter. Contact us today for a consultation.