Common Problems

Do You Need a Trust?

Charles Schwab asked three of their own professionals important questions regarding the differences between wills and trusts.

A trust is a fiduciary arrangement that specifies how your assets are to be distributed, usually without the involvement of a probate court. They can be structured to take effect before death, after death, or in case of incapacitation. In contrast, wills take effect only upon death and typically need to be authenticated by a probate court, which can take time and involve additional costs.

Trusts can be arranged to accomplish a variety of different goals. For example, you can use a trust to transfer property, help minimize estate taxes, preserve assets for minors until they are adults, or benefit a charity.

By |2021-11-05T15:21:20-07:00October 6th, 2021|

Common Mistakes With Retirement Plans and Estate Planning

The Legal Intelligencer: “Do you have an estate plan? If not, you are not alone. Fewer than half of Americans have an estate plan—the percentage varies between 55 percent and 70 percent, depending on which survey you rely upon. For those of you with an estate plan, there are mistakes that can be easily avoided. In this article, I will specifically address the issue of retirement plans and beneficiary designation forms.”

By |2018-02-12T14:09:45-08:00February 15th, 2018|

How to Prepare for Your Digital Afterlife  “You post about your kids and pets. You tweet about your travels and work. You upload videos of your dog playing in the latest snowpocalypse.  Your social sites chronicle the ups and downs, the loves and losses, the adventures and even the boredoms of your life. So what happens to all those digital tidbits when you die?  On Thursday, Facebook announced that it’s allowing users to set up a ‘legacy contact’ — a family member or friend who can manage a person’s social account when they die.”

By |2016-12-13T20:33:26-08:00February 17th, 2015|

Four Tips for Avoiding a Will or Trust Contest

A will or trust contest can derail your final wishes, rapidly deplete your estate, and tear your loved ones apart.  But with proper planning, you can help your family avoid a potentially disastrous will or trust contest.

If you are concerned about challenges to your estate plan, consider the following:

  1. Do not attempt “do it yourself” solutions.  If you are concerned about an heir contesting your estate plan, the last thing you want to do is attempt to write or update your will or trust on your own.  Only an experienced estate planning attorney can help you put together and maintain an estate plan that will discourage lawsuits.
  2. Let family members know about your estate plan.  When it comes to estate planning, secrecy breeds contempt.  While it is not necessary to let your family members know all of the intimate details of your estate plan, you should let them know that you have taken the time to create a plan that spells out your final wishes and who they should contact if you become incapacitated or die.
  3. Use discretionary trusts for problem beneficiaries.  You may feel that you have to completely disinherit a beneficiary because of concerns that a potential beneficiary will squander their inheritance or use it in a manner that is against your beliefs.  However, there are other options than completely disinheriting someone. For example, you can require that the problem beneficiary’s share be held in a lifetime discretionary trust and name a third party, such as a bank or trust company, as trustee.  This will insure that the beneficiary will only be entitled to receive trust distributions under terms and conditions you have dictated.  You will also be able to control who will inherit the balance of the trust if the beneficiary dies before the funds are completely distributed.
  4. Keep your estate plan up to date.  Estate planning is not a one-time transaction – it is an ongoing process.  Therefore, as your circumstances change, you should update your estate plan.  An up to date estate plan shows that you have taken the time to review and revise your plan as your family and financial situations change.  This, in turn, will discourage challenges since your plan will encompass your current estate planning goals.

By following these four tips, your heirs will be less likely to challenge your estate planning decisions and will be more inclined to fulfill your final wishes. If you are concerned about heirs contesting your will or trust, you should seek the professional advice now.

By |2016-12-13T20:33:27-08:00December 14th, 2014|

What Happens to Our Facebook Accounts When We Die?

Kristina Sherry, a 2013 J.D. candidate at Pepperdine University School of Law, wrote a great article on a topic that too many people fail to consider – what happens to digital assets like a Facebook account when the owner of the account dies.  The article begins:

“In the vast cyber-universe of millions of websites, billions of e-mails sent daily, and approximately twenty hours worth of amateur video uploaded to YouTube in the time it takes you to read this sentence—collectively sucking our psyches into digital excursions like baby pandas sneezing, small children shimmying to Beyoncé, and increasingly nonsequitur Internet memes—there are few things creepier than the dead Facebook friend.  Yet, according to projections, more than 580,000 Facebook users will die in the United States this year, leaving just as many friends and family members wondering how to best handle a loved one’s persisting postmortem digital presence. Without third-party intervention, a dead Facebooker’s ‘profile’ page will be frozen in time like a pixilated Dorian Gray, colored by iPhone photos, ‘pokes,’ and ‘LOL!’s—possibly for an eternity.”

By |2013-02-04T08:29:44-08:00February 4th, 2013|

Thomas Kinkade Estate Fight Shows Why You Should Update Your Estate Plan

Updating your estate plan is critical, especially after major life events.  On Wall Street tells us the sad story of artist Thomas Kinkade, who failed to actually update his estate plan despite an apparent desire to do so.  On Wall Street has the story:

Legacy expert attorneys Danielle and Andy Mayoras say the untimely death and shoddy estate planning efforts of renowned artist Thomas Kinkade serve as a prime example of why clients should update their wills on a regular – and sober – basis.

It’s estimated that one in 20 American homes have a Thomas Kinkade painting hanging on their walls. The self-proclaimed “Painter of Light” turned his gift of rendering landscapes and other works of art into a tremendous commercial endeavor.

In fact, his numerous corporate holdings reportedly topped $100 million in annual sales some years, primarily due to mass reproduction of his works.

But the “Painter of Light” was not without his demons, primarily alcoholism and a failed marriage. He died suddenly at age 54 in April, an early and untimely demise reportedly caused by “acute intoxication” from alcohol and valium.

His wife, Nanette, had filed for divorce two years before and the couple was legally separated. Kinkade died while living with his girlfriend of 18 months, Amy Pinto-Walsh.

The girlfriend and estranged wife began fighting almost immediately after Kinkade died. Pinto-Walsh was kept from the funeral and slapped with a lawsuit for breach of a confidentiality agreement. The family wanted her to remain quiet and not share any personal details with the media.

Pinto-Walsh did not go away quietly. She went to probate court to enforce two handwritten wills (called “holographic” wills) that she says Kinkade wrote for her benefit in late 2011.

These two handwritten wills are interesting, to say the least. The first one, dated Nov. 11, 2011, bequeaths to Pinto-Walsh the sum of $10 million dollars “from my corporate policy” and his house and property next door “for her security.”

The second will, dated Dec. 11, 2011, includes both of these same bequests to Pinto-Walsh, but further clarifies that the $10 million gift is to be used by Pinto-Walsh to create a museum to show the public his works.

But what is most interesting about these two purported wills is not what they say, but how they are written. They are so illegible that calling them “chicken scratch” may be deemed offensive to chickens. This from a man who left behind an estate reportedly worth more than $66 million because he was so gifted in painting popular works of art.

By |2016-12-13T20:33:28-08:00July 11th, 2012|

California Recognizes Tort of Intentional Interference with Expected Inheritance

California has finally joined the majority of states and recognized the tort of intentional interference with expected inheritance (“IIEI”).  This adoption was done by the California Court of Appeals based on the fact that the IIEI claim is consistent with other California laws, the fact that of the 42 states that have considered adopting an IIEI claim, 25 states have adopted the claim, that the US Supreme Court has called IIEI as “widely recognized” tort, and other public policy considerations.

The ruling came out of the California Court of Appeals for the Fourth Appellate District, after the deceased’s longtime partner was denied any inheritance by the California probate court.  Brent Beckwith was in a committed relationship for nearly 10 years with partner Marc Christian MacGinnis.  MacGinnis had no living family members other than his sister, Susan Dahl.  But MacGinnis was estranged from his sister.

At one point, MacGinnis showed Beckwith a will on his computer that divided his $1 million plus estate between Beckwith and Dahl.  MacGinnis never signed the will.  MacGinnis wanted to print and sign the will, but was never able to do so.  MacGinnis later fell ill.  He asked Beckwith to print the will.  When Beckwith couldn’t locate the will, MacGinnis asked Beckwith to prepare a new will, based on the distribution plan MacGinnis had already discussed with Beckwith.  When Beckwith called Dahl to discuss the will, Dahl claimed that she had friends who were attorneys and she would have them draft a trust for MacGinnis, which she claimed was more appropriate for her brother.   She told Beckwith not to give the new will to MacGinnis for signing.  A few days later, MacGinnis went in for surgery.  The doctors told Dahl that MacGinnis may not recover from the surgery.  However, because Beckwith “was not family”, the doctors did not tell him about the potential risks of the surgery.  Dahl did not share this information with Beckwith nor did she ever give MacGinnis any trust documents to sign.  MacGinnis later died without signing any estate planning documents.

Since he did not have an estate plan, Dahl was able to successfully claim that she was the sole heir to MacGinnis’ sizable estate.  Beckwith disputed Dahl’s claims, but since California’s rules of intestate succession do not recognize MacGinnis’ partner of nearly 10 years, Beckwith got nothing.  Beckwith later sued, claiming that Dahl had improperly interfered with his expected inheritance.  The result was the court recognizing a new claim for IIEI.

In California, a plaintiff may plead an IIEI claim only if a probate remedy is not available.  The California Court identified the five specific elements that a plaintiff must allege to state a claim for IIEI:

1. Expectation of inheritance. The plaintiff must plead that he or she had an expectancy of receiving an inheritance.

2. Causation. “[T]here must be proof amounting to a reasonable degree of certainty that he bequest or devise would have been in effect at the time of the death . . . if there had been no such interference.”

3. Intent. “[T]he defendant had knowledge of the plaintiff’s expectancy of inheritance and took deliberate action to interfere with it.”

4. Tortious interference. “[T]he interference was conducted by independently tortious means, i.e., the underlying conduct must be wrong for some reason other than the fact of the interference.”

5. Damage. “[T]he plaintiff must plead that he was damaged by the defendant’s interference.”

 To read the entire story, visit Estate of Denial.

By |2012-07-09T12:37:52-07:00July 9th, 2012|

Be Proactive, Not Reactive With Your Estate

JD Supra:  “Estate planning should be focused on anticipating possible outcomes and structuring your affairs for the tax-efficient disposition of your assets to your loved ones. However, all too frequently we estate-planning practitioners find ourselves working with clients in a reactive situation, trying to salvage an acceptable outcome out of some missed opportunity. Obviously, better outcomes are achieved when planning, rather than when reacting.”

By |2016-12-13T20:33:29-08:00May 24th, 2012|

Estate Planning Mistakes New Parents Don’t Want To Make  “It’s official: Jacob and Sophia are America’s most popular baby names. Once you’ve settled on a name for your new bundle of joy, it’s not too early to make legal preparations as your child enters the world.

Jacob has been the No. 1 boy’s name for 13 years, according to the Social Security Administration, which released the list of top baby names for 2011. Sophia knocked Isabella to No. 2 after a two-year stint at the top of the list for girls.

If you have a young child in your home, it’s already time to start thinking about estate-planning issues to protect your newborn. Following are the five most common estate-planning mistakes that parents make after having a baby.”

By |2016-12-13T20:33:29-08:00May 24th, 2012|

Homeless After Bad Estate Planning?

Huffington Post:  “As an estate planning attorney, I am often asked to transfer clients homes into their children’s names. The reasons given for the request include a desire to avoid probate, reduce estate taxes and to protect the home in event of long-term care claims. These are certainly worthy objectives. However, transferring your home to your children is a clumsy method of trying to accomplish your estate-planning goals. Having counseled thousands of families over the years, I can tell you that this well-intentioned transfer is more likely to do harm than good.”

By |2016-12-13T20:33:30-08:00May 10th, 2012|

Major Estate Planning Mistakes You Don’t Want To Make

Forbes:  “It never fails to amaze me that so many otherwise savvy individuals, many of whom have their financial lives otherwise buttoned-up, use poor judgment (or no judgment) when it comes to their estate planning. The list of major estate omissions and poor choices is almost infinite. Here are some of the mistakes that are frequently made.

1. Not having a plan

In a sense, everyone does have an estate plan; state law makes this point a certainty. It simply may not be the plan that you had in mind, or that your family would have preferred.”

By |2016-12-13T20:33:31-08:00April 25th, 2012|

Avoiding Common Issues With Trusts  “George Bernard Shaw said “Marriage is an alliance entered into by a man who can’t sleep with the window shut and a woman who can’t sleep with the window open.” Like marriage, estate planning takes work — optimism, contingency planning and adjusting.

I want to share some of the pitfalls I’ve experienced so that you avoid a head-on collision on your life journeys. They’re talking points with your family, business partners, tax experts, lawyers and financial advisors. And please think about estate planning as planning to live (not death) and preparing your heirs for your estate (not vice versa).

My No. 2 kid is trustee … I don’t get along with the others. The trustee holds an important position, wearing many hats and has a fiduciary standard of care. Duties include accounting, compliance, loyalty to beneficiaries, impartiality and prudence. Trustees may be able to hire professionals to help. However, the buck ultimately stops with the trustee. Name the “right” trustees to make those King Solomon decisions and see your well-intentioned plans become reality.”

By |2017-10-07T11:14:46-07:00April 9th, 2012|

In Naming Trusts And Entities, Quit Using The Client’s Name!

Asset protection attorney Jay Adkisson writes in Forbes:  “For some reason, planners are compelled to title things in their client’s names. Be it the John Doe Trust or the John Doe LLC, or even the John Doe Family Limited Partnership, client’s names are showing up in legal documents that are publicly filed or publicly referenced in one form or another.  From an asset protection planning viewpoint, this practice is remarkably stupid.”

By |2016-12-13T20:33:36-08:00February 1st, 2012|

5 Estate Planning Mistakes You Don’t Want To Make

Mansfield Patch:  A wise man once said, “If you don’t die before retirement chances are pretty good you’ll die sometime afterwards”.  And while we all know and understand that death is a sad fact of life, we sometimes put off making decisions that will help our loved ones after we’re gone.

 When Steve Jobs died last year, many financial pundits wondered whether his advisors had helped him set up an effective estate plan. Given the fact that Jobs famously resisted the advice of his doctors for several months while he explored other alternatives, some wondered if he might have acted similarly when it came to his estate planning. With a net worth estimated at nearly $7 billion, the stakes were large — his estate could have been hit with nearly $2.5 billion dollars in taxes. Further, Jobs was known as a very private person and it was quite possible that all his affairs could have been played out in detail at the probate courts for all the world to see. It turns out that Jobs plans were intact and it appears this helped his estate avoid many taxes, ensured his privacy and made his intentions clear to his surviving family and friends. And while we might not be able to relate to Steve Jobs at all, the reality is that it would be a major mistake to think that estate planning is just for the rich and famous.

 Here are five examples of estate planning mistakes you may be making now:

 1. You keep putting it off. If you postpone planning until it is too late, you run the risk that your intended beneficiaries — those you love the most — may not receive what you would want them to receive because of extra administration costs, unnecessary taxes or squabbling among your heirs.

 Continue reading 5 estate planning mistakes you don’t want to make.

By |2016-12-13T20:33:36-08:00January 17th, 2012|

5 Big Estate Planning Mistakes You Don’t Want To Make

Forbers:  Applying Murphy’s Law, “If anything can go wrong, it will,” to estate planning is crucial because in this case when something does go wrong, it goes very wrong and you aren’t around to fix it. Murphy’s Law at first glance appears to be overly pessimistic but the original intention of Capt. Edward A. Murphy wasn’t to depress anyone; it was to have a successful outcome. Edward Murphy was an engineer who was involved in the U.S. Army Air Force Aero Medical Laboratory’s project MX-981. Project MX-981 was designed to test the effects of deceleration forces of high magnitude on the human body. When a technician wired all of the strain gauges backwards, Capt. Murphy was heard muttering his famous phrase and the rest is history. Since they assumed mistakes were being made and things would go wrong, the attention to detail was heightened and the inevitable errors were caught. When asked during a press conference how it was that nobody had been severely injured during the tests, Dr. John Stapp credited Murphy’s Law, indicating that it was important to consider all the possible things that could go wrong before conducting a test, and then counteracting them.

A few years ago, I was going to give a financial education workshop to a group of petroleum engineers near Bakersfield, California and I happened to meet someone on the airplane who regularly presented to engineers. He gave me some advice to challenge them to find something wrong in the workshop—a statistic or a calculation with an incorrect formula, something like that. First of all, my flight companion mentioned, they are doing that anyways, but when they don’t find something, credibility instantly increases, and if they do find something, you certainly want to know. We have a lot to learn from the inquiring mind of an engineer and how he approaches his task constantly looking for mistakes, possible problems, and worst-case scenarios. Most people take the approach that “everything is fine.”

Everything is not fine. My experience with estate planning is that there are mistakes, oversights, and omissions all over the place. Over my 25-year career, I have seen countless horror stories. One of the worst cases I encountered was a young woman in her thirties whose mother sadly passed away from breast cancer in her early 50’s. The mother had listed her own mother (the grandmother) instead of her children as the beneficiary on her IRA plan (presumably when the children were minors). Unfortunately, the grandmother was on Medicaid so any funds inherited were to go to the state. I am sure the mother never dreamed that she had the wrong beneficiary.

Having the wrong beneficiary is a very common mistake and when it goes unnoticed, there can be dire consequences to your loved ones. Here are five estate-planning mistakes that you should assume you are making and take immediate steps to fix:

You have the wrong guardian listed for your children: A will is a hand from the grave to give instructions to your state as to who you choose as guardians to care for your children. If you don’t have a will, the state decides who will care for them at a hearing. If you do have a will, review it assuming Murphy’s Law that something will go terribly wrong. Check to see if your original guardian is still valid. The guardian listed for my god-daughter is being asked to transfer with his job from Davis, California to Singapore. If that happens, the parents may want to amend the will and choose another guardian.

Assume your choice will be challenged. A judge is required to act in the best interest of the child so consider also writing out a letter of explanation as to why you chose this guardian. According to this article by Nolo Press, the judge will consider the child’s preference (to the extent it can be ascertained), who will provide the greatest stability and continuity of care, who will best meet the child’s needs, the relationships between the child and the adults being considered for guardianship, and the moral fitness and conduct of the proposed guardians. If you write a letter of explanation, the judge has more information to base his or her decision on.

You have the wrong beneficiary for your IRA or 401(k) from a former employer: As mentioned above, this is a very common mistake. Single parents list the grandparents as beneficiaries when children are minors and never change it when the children reach the age of majority. Couples who divorce never change the beneficiary on their plans even after the divorce is settled. Since the beneficiary information doesn’t show up on statements and the original paperwork isn’t easily accessible, it comes down to “out of sight, out of mind.” The problem is beneficiary accounts like 401(k)s and IRAs bypass probate. Usually that is an advantage, but when there is a mistake, it might not be able to be corrected, and if it can be, it might involve expensive litigation. The parties involved would have to determine your intention and, of course, you aren’t around to speak up for yourself. Assume you have the wrong people in place, and set about putting the right ones in place.

Read the rest of this article here.

By |2016-12-13T20:33:38-08:00December 16th, 2011|

Common Estate Planning Mistakes And How To Avoid Them

Online Athens:  I want to highlight some of the most common estate planning mistakes I think people routinely make (knowing that I can’t possibly cover them all in one column). You will notice that I’m not going to discuss the estate tax beyond saying that very few people are subject to it and that it can be effectively managed by an attorney and financial planner with expertise.

In my experience, No. 1 and No. 3 are the root causes of the other issues.

1. Failure to plan: I am constantly surprised to see how many people do not have basic estate planning documents in place. The statistics consistently say more than 50 percent of Americans do not have a will, so if you happen to have one, the odds are that one of your neighbors does not.

Estate planning is another one of those areas in financial planning that plays to our desire to procrastinate. The only immediate payoff we have to getting the core documents in place is to quiet that inner voice that constantly says, “I need to take care of this.”

With proper planning, many negative consequences such as not passing your assets as you wish, strained family relationships and even a lawsuit can be avoided.

Simply stated, dying without a will is easy, but picking up the pieces afterward is not. On the other hand, getting a basic will in place should not be complicated.

By |2020-03-23T07:40:15-07:00November 15th, 2011|

A Review Of Quicken Estate Planning Software

Florida Estate Planning Lawyer Blog:  I recently receive a copy of Quicken Willmaker 2009. I have previously written about many articles about the unintended results that occur with Do It yourself and Free Estate Planning Documents created by individuals without the advice of counsel and the problems with online document preparation services like LegalZoom and RocketLawyer.

I decided to try out a few of the documents in Quicken to see if they had improved the quality and accuracy of their Florida documents. Last week I wrote about problem with the Quicken Willmaker 2009 Durable Power of Attorney. This week I will be looking a the Revocable Living Trust. I have previously written about the many problems in using Quicken to create a Firearms Trust but for this article I will be focusing on the typical issues with regular estate planning and living trusts.

By |2016-12-13T20:33:39-08:00November 1st, 2011|

An Estate Planning Mistake You Don’t Want To Make  One of the biggest mistakes Nicole Middendorf, CDFA sees people make is spending a lot of money getting divorced and then once the divorce is over, they don’t change their beneficiaries on their 401k, IRA’s, or even their will/trust.

Once your will is written, you can not just ignore it. It is extremely important to keep your will updated with your estate planning attorney. Life and circumstances change over time, and your will should reflect those changes. In order to make sure your will reflects your wishes, Nicole has recommended that your will be updated whenever one of the following occurs:

  • A divorce
  • A death
  • A birth of a child
  •  A marriage
  • If you change your mind on your beneficiaries
By |2011-11-07T07:09:48-08:00October 26th, 2011|

Little Things Can Cause Big Fights When A Relative Dies

Forbes:  “Unlike financial assets, which can generally be divided easily amongst heirs, tangible personal property is unique. And the complexity of distributing a lifetime’s worth of possessions is something that many people overlook. Families have been torn apart over everything from ownership of a valuable painting, the grandfather clock and the gun collection, to who gets Mama’s recipe box. Sometimes the object in question is an item of substantial material value, but just as often, it seems, the appeal is purely sentimental. People get emotionally attached to objects that symbolize the person they are mourning.  Discussing these issues while parents are still alive is far preferable to letting children duke it out for themselves later.”

By |2016-12-13T20:33:39-08:00October 26th, 2011|
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